Net absorption in Q2 2026 is down but H1 is stronger y-o-y indicative of a temporary blip

• Office leasing volumes were down 24% q-o-q to 4.1 mn sq ft in Q2 2026 due to uncertainties around portfolios and headcount projections driven by AI adoption and geopolitics affecting business decision-making.
• Tech led quarterly leasing volumes with a 50% share, followed by flex with 26% . SBD led quarterly space take-up with a 76% share, with the SBD City cluster accounting for 44.1% of this submarket’s total leasing volume.

Q2 new office supply at 5.8 million sq ft, up 73% y-o-y

• New supply was concentrated in SBD with at 5.0 million sq ft (85.6% share) of supply added during the quarter, followed by Electronic City with a 13.0% share. The ORR South East cluster contributed 50% of the SBD’s supply in Q2 2026.
• Office vacancy rose to 11.4% in Q2 2026, up 80 bps q-o-q, due to slower leasing and low pre-leasing levels in new completions. SBD and Electronic City saw vacancies rise with new supply, while Whitefield’s vacancy fell q-o-q.

Rents up modestly by 0.7% q-o-q

• Property fundamentals remained robust across prime locations. Whitefield led quarterly growth with rents rising 1.3% q-o-q. Overall rents were up 5.4% y-o-y inidcating the strong market fundamentals. CBD posted the strongest rental growth of 9.0% y-o-y.
• Fresh leasing activity in premium grade buildings at prime locations sustained the upward momentum despite short-term market softness. Investor interest in asset purchase opportunities remains strong with yields showing a consequent compression of 20 bps y-o-y.

Outlook: Bengaluru remains one of India’s most active office markets sustaining strong mediumto long-term investor interest

• Bengaluru’s office market is poised for growth as global companies expand tech and back-office operations. Future expansion will encompass manufacturing, healthcare, BFSI, flexible workspaces, engineering, and R&D, while responding to evolving workplace requirements.
• Bengaluru’s office market will continue to witness new supply while maintaining rent growth through robust leasing. Capital values are expected to rise as sustained demand and solid fundamentals attract domestic and international investments.