Hyderabad records strongest-ever Q1 office leasing at 3.15 MSF: Cushman & Wakefield

Hyderabad’s office market maintained strong leasing momentum in Q1 2026, supported by sustained demand from large occupiers. According to Cushman & Wakefield’s Office MarketBeat Q1 2026 report, the city recorded its highest-ever first-quarter gross leasing volume (GLV) at 3.15 million square feet (MSF), marking a 21.6% year-on-year (YoY) increase. 

In Q1 2026, Hyderabad accounted for 14% of India’s total office GLV of ~22 MSF, underscoring its position as one of the country’s key office markets. Leasing activity during the quarter was led by large-sized transactions (≥100,000 sq ft), which accounted for 81% of total GLV, while mid-sized deals (25,000–99,999 sq ft) contributed a further 17%. Activity remained highly concentrated in Madhapur, which accounted for 91% of total leasing, highlighting its dominance within the city’s office market.

Despite the absence of new completions during the quarter, net absorption remained robust at 2.21 MSF, carrying forward the strong momentum seen last year. In 2025, the city recorded its strongest post-pandemic year for absorption, with a quarterly average of ~2.27 MSF, and the current quarter’s performance reflects the depth and sustainability of occupier demand.

*Net Absorption refers to the net change in occupied space within a given market over a specific period, calculated as the difference between occupied stock at the end of the current period and the previous period. The combination of no new supply and healthy absorption led to moderation in vacancy levels, with citywide vacancy compressing by 260 basis points YoY to 20.22%. The demand remained particularly strong in Madhapur, where overall vacancy stood at 7.5%, while Grade A+ assets tightened further to an exceptionally low 4.8%.

City’s average stock-weighted rent increased 11.6% YoY to INR 92.2, the highest level recorded to date. Madhapur continued to command a rental premium at INR 105.5, supported by limited availability and sustained demand. Meanwhile, Gachibowli’s weighted average rent stood at INR 72.3, retaining a cost advantage and positioning it a preferred alternative destination for occupiers. 

From a sectoral standpoint, IT-BPM remained the largest contributor, accounting for 36% of leasing activity, followed closely by the flexible Workspace segment with a 30% share. BFSI accounted for 23%, driven by global financial institutions expanding and strengthening their presence in the city. GCCs accounted for 0.83 MSF of leasing during the quarter, representing 26% of total GLV, underscoring Hyderabad’s position as one of the leading Global Capability Centre (GCC) hubs in the country. The city’s deep talent pool and mature occupier ecosystem continue to support long-term expansion by global firms.

Looking ahead, Hyderabad is expected to see a strong supply pipeline, with approximately 11 MSF of new office space anticipated over the remainder of 2026, primarily concentrated in Gachibowli, alongside selective additions in Madhapur. An additional ~20 MSF is expected to be delivered across 2027–2028, ensuring continued capacity to accommodate future demand.

Veera Babu, Executive Managing Director, Tenant Representation - India, Cushman & Wakefield, said, “Hyderabad has seen a strong start to 2026, with gross leasing volumes reaching a new high for the first quarter. The city continues to hold a strong position within India’s office market and stands out for its ability to accommodate large occupier requirements, even as availability tightens across several key markets.

Sustained absorption has contributed to a steady decline in vacancy levels, with the current quarter marking the lowest level recorded over the past 15 quarters, reflecting continued strength in underlying occupier demand.

Looking ahead, the market remains well positioned to sustain leasing momentum, supported by an active demand pipeline of nearly 12–15 million square feet currently under discussion. Incremental supply expected over the coming quarters, along with Hyderabad’s strong talent base and growing GCC presence, should continue to support demand across the market.”