Bengaluru office market will have another major growth phase as the city is expected to add close to 25 million square feet of office space in the second half of the financial year 27 (H2 FY27), as per the latest ICRA report. It is also worth noting that 50% of the future supply of office space has been already leased in tandem with the inflow of international and national companies into the city.
The ICRA report emphasizes that even after such massive new supply for the next two years—around 16-17 million sq ft for FY26 and FY27—Bengaluru's occupancy rate would still increase, obviously, the market has strong absorbing power. The organization expects that the occupancy will be about 91-91.5% towards the end of March 2026 and it can even increase up to 92-92.5% by March 2027 with the continuous leasing activities from industries like Global Capability Centres (GCCs), IT, engineering, research, and new emerging businesses.
Main Highlights of ICRA Report
- Bengaluru recorded 16.3 million square feet (msf) of fresh Grade-A office supply in FY2025 and 8.4 msf in H1 FY2026, against net absorption of 18.4 msf and 10.1 msf, respectively. As net absorption outpaced supply, occupancy increased by 230 bps to 90.8% by September 2025 from 88.5% in March 2024. The absorption is driven by strong demand from the GCCs^. Despite an expected 16.0 - 17.0 msf of new supply in FY2026 and FY2027, occupancy levels are projected to rise to 91.0-91.5% by March 2026 and 92.0-92.5% by March 2027, backed by continued leasing momentum.
- Bengaluru has the highest Grade-A office supply contribution of 26% (~277 msf) among India’s top six cities* as on September 30, 2025. Outer Ring Road (Southeast), Whitefield, and Nagavara are Bengaluru’s leading micromarkets, together contributing approximately 37% of the city’s total office supply. ICRA expects vacancy levels to continue to be low in Outer Ring Road (SE), given healthy net absorption. With no new supply anticipated in FY2027, Whitefield and Nagavara are projected to experience a substantial reduction in vacancy rates, driven by sustained healthy absorption.
- The top 10 developers in Bengaluru collectively hold 61% of the city’s Grade-A office stock, with six of them maintaining occupancy above 90%. The rental rates in the top micromarkets - Outer Ring Road (SE), Nagavara, Whitefield have been increasing steadily over the last five years at a CAGR of 3- 4%. ICRA expects the average rental rate for the Bengaluru market to increase by 3-4% in FY2026.
- Between FY2018 and FY2025, the Bengaluru office market stock recorded a CAGR of approximately 7%, which was in line with the CAGR for India’s top six cities. The Hebbal– Devanahalli corridor (towards the airport) has seen a steady rise in Grade-A office supply over the years, with its share of total supply projected to grow to ~8% by FY2027 from 3% in FY2018 .
Supply and Absorption Trends Indicate Market Strength
The recent supply-demand trends have been a major factor in confirming the market's strength. In FY25, Bengaluru was the location of 16.3 million sq ft of new Grade-A office space and the first half of FY26 (H1 FY26) has followed up with 8.4 million sq ft. In both these periods, net absorption was higher than supply thus it went up to 18.4 million sq ft in FY25 and 10.1 million sq ft in H1 FY26.
The consistent pace at which absorption has outstripped supply over these periods was the main reason for the 230 basis point rise in occupancy, which moved from 88.5% in March 2024 to 90.8% as of September 2025. As per ICRA, one determining factor for this trend is the increasing number of operations, consolidation of portfolios, as well as acquisition of top-quality workspace in city areas by GCCs, which are vibrant business clusters in the city, where they hold their headquarters.
Bengaluru Leads India in Grade-A Office Stock
As of September 30, 2025, Bengaluru is holding the biggest share of Grade-A office stock among the top six cities of India, thereby contributing 26% (277 million sq ft) to the total national stock. Besides Bengaluru, the Delhi-NCR, Mumbai Metropolitan Region (MMR), Hyderabad, Chennai, and Pune make up the leading office real estate sectors in India, however, Bengaluru still maintains the lead when it comes to supply and demand metrics.
The city's office market underwent a yearly growth, almost 7%, from the fiscal year 2018 till 2025, which has solidified Bengaluru's standing as the most vibrant commercial real estate hub in India. The growth has been attributed to the city's talent pool, tech-developed ecosystem and a growing number of multinational firms, who choose to set up or expand their Global Capability Centers in Bengaluru.
Hebbal–Devanahalli Corridor Emerges as a High-Growth Micro-Market
The documented trend that the report put emphasis on most is the phenomenal speed with which the Hebbal–Devanahalli corridor that goes along the Bengaluru airport route is growing. This stretch has year after year turned into a major cluster of new Grade-A developments, thereby raising the corridor’s share of the city’s total office supply to a point, where by FY27 it is expected to be as high as 8%, which is nearly threefold as compared to the year of 2018 when it was only 3%. Better connectivity, large unbroken tracts of land, easy access to new residential neighborhoods, and the presence of tech parks and mixed-use developments are some of the factors that have propelled it to the top.
Strong Leasing Pipeline and Robust Market Fundamentals
ICRA states that the next couple of years will be very challenging from a supply standpoint, nevertheless, Bengaluru will be in a position to keep up a high level of occupancy and good net absorption, which is a true reflection of the market's sound fundamentals. The primary demand driver to fuel the increase in leasing activity will be the ongoing expansion of GCCs, which is mainly attributable to India being a low-cost location with a quality workforce and an ever-growing innovation ecosystem.
With the majority of the biggest planned projects for FY27 already in the process of securing tenants through pre-leasing, developers and investors are looking forward to continuous demand, especially for top-notch, future-ready, environmentally-friendly Grade-A spaces. Bengaluru's commercial real estate market, enabled by its regular achievements and premium-quality future supply, is ready to prolong its reign as the most stable and highest growth office market in the country over the next several years.
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