Bengaluru’s office market is set to remain one of the tightest in the country over the next two years, with vacancy levels expected to stay in single digits even as fresh supply enters the market, according to the latest report by ICRA. The city’s strong leasing momentum, driven largely by Global Capability Centres (GCCs), continues to absorb new office space faster than it is being added.
The rating agency estimates that Bengaluru will witness around 25 million square feet (msf) of new office supply during the second half of FY2027, covering the period from H2 FY2026 to FY2027. Nearly a quarter of this upcoming supply is already pre-leased, underlining the strength of tenant demand well before completion. Despite a sizeable pipeline of 16 to 17 msf expected to be completed across FY2026 and FY2027, overall occupancy levels are projected to improve steadily. Vacancy is expected to fall to 91.0–91.5 percent by March 2026 and further to 92.0–92.5 percent by March 2027.
Recent trends reflect this tightening market. In FY2025, the city added 16.3 msf of fresh Grade-A office space, followed by another 8.4 msf in the first half of FY2026. During the same periods, net absorption stood higher at 18.4 msf and 10.1 msf respectively. With demand consistently outpacing supply, occupancy levels rose by 230 basis points to 90.8 percent by September 2025, from 88.5 percent in March 2024.
This sustained absorption is being powered primarily by GCCs, as global corporations increasingly expand their captive technology, engineering and back-office operations in India. Bengaluru, with its deep talent pool and mature technology ecosystem, continues to remain the preferred destination for such centres.
The city also commands the largest share of Grade-A office stock among India’s top six office markets. As of September 30, 2025, Bengaluru accounted for around 26 percent of the cumulative Grade-A supply of these cities, translating to nearly 277 msf. Between FY2018 and FY2025, the city’s total office stock grew at a compound annual growth rate of about 7 percent, broadly in line with the average growth recorded across the top six markets.
Within the city, growth is no longer limited to traditional business districts. The Hebbal–Devanahalli corridor, which connects the city to the international airport, has emerged as a fast-growing office hub. Its share of total Grade-A supply is projected to rise to about 8 percent by FY2027, up from just 3 percent in FY2018. This points to a clear widening of the city’s commercial footprint.
Outer Ring Road in the southeast, Whitefield and Nagavara continue to be Bengaluru’s leading office micro markets. Together, these three locations account for roughly 37 percent of the city’s total office supply. Vacancy in Outer Ring Road (SE) is expected to remain low due to steady absorption and limited upcoming supply. Whitefield and Nagavara, where no major new completions are anticipated in FY2027, are also likely to see a sharp decline in vacancy as existing inventory gets absorbed.
On the ownership side, the top 10 developers together control about 61 percent of Bengaluru’s Grade-A office stock. Notably, six of these developers are already operating at occupancy levels above 90 percent, reinforcing the tight supply conditions in the prime commercial pockets.
Rental growth, while gradual, has remained consistent. Over the past five years, rents in key micro markets such as Outer Ring Road (SE), Whitefield and Nagavara have grown at a compound rate of 3–4 percent. ICRA expects this trend to continue, with the average rental rate for the overall Bengaluru market likely to rise by 3–4 percent in FY2026.
The strong domestic leasing story is playing out even as global uncertainties persist. Tightening monetary policy in the US, along with trade restrictions and geopolitical risks, continue to cast a shadow over global business sentiment. Yet, office leasing activity in India remained resilient in the first half of FY2026. The agency, however, noted that it will continue to closely track global macroeconomic developments, as prolonged external shocks could eventually impact corporate expansion plans.
For now, Bengaluru’s office market appears well placed. With strong tenant demand, improving occupancy, disciplined new supply and steady rental growth, the city is likely to retain its position as India’s most sought-after commercial real estate destination through FY2027 and beyond.
