Pune witnessed a moderation in office space demand during the first quarter (January-March) of 2026, with net absorption declining to 11 lakh square feet from 20 lakh square feet in the same period last year, as per data from Anarock. Industry experts, however, attributed this dip not to a structural slowdown but to the exceptionally robust leasing activity observed in 2025.
GCCs Continue to Drive Demand
P. Vilas, Pune branch head of operations at Knight Frank India, noted that while leasing has slowed, Global Capability Centers (GCCs) remain a key anchor for demand. GCCs now account for 55% of Pune's office space, significantly higher than the 47% average across other major Indian cities.
However, external factors could pose challenges. “Despite the promise of GCCs, increased geopolitical uncertainties may impact their expansion plans,” said Gautam Shahi, senior director at Crisil Ratings. He added that disruptions in the IT and ITeS sectors due to Artificial Intelligence (AI) could further affect hiring and office space requirements.
Sharp Drop in Supply Tightens Market
The dip in demand was accompanied by an even sharper drop in supply. Peush Jain, managing director of commercial leasing and advisory at Anarock Group, pointed out that completions plummeted by 69% to just 10 lakh square feet. This supply-demand imbalance has led to a tighter market. Vacancy levels dropped to 11.6%, while average monthly rentals rose by 6% to Rs88 per square foot. “This indicates that occupiers still prioritise quality space,” Jain said. “Pune remains one of India’s most structurally resilient office markets, bolstered by its GCC strength.”
Flight to Quality Intensifies
Market trends suggest a growing “flight to quality.” Veera Babu, executive managing director of tenant representation at Cushman & Wakefield, observed that sustained occupier interest is outpacing the availability of high-end office space. “We are seeing a clear supply-demand imbalance, particularly in Grade A and A+ assets within core business districts,” Babu said. He noted that occupiers are increasingly seeking premium, centrally located buildings that support modern technology, evolving workplace cultures, and sustainability requirements.
Industry experts expect vacancy levels to remain tight for the foreseeable future, especially for high-quality assets in established business hubs.
