Mumbai office vacancy drops to 16-year low of 10.8% in Q2
Tight availability signals resilient occupier demand despite slower quarterly leasing, potentially supporting rents and capital values across key office clusters.
Mumbai office vacancy fell 10 basis points quarter-on-quarter to a 16-year low of 10.8% in Q2 2026 as net absorption exceeded new supply.
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Net absorption continued to outpace new supply.
Mumbai's office leasing activity moderated sharply in the second quarter of 2026, although first-half volumes remained ahead of the same period last year, according to JLL.
Gross leasing fell 59.7% quarter-on-quarter to 1.69 million sq ft in Q2. However, leasing for the first half reached 5.88 million sq ft, up 17.8% from H1 2025. JLL attributed the quarterly moderation to occupiers pausing decisions amid uncertainty and supply constraints.
The BFSI sector remained the largest source of demand, accounting for 29.5% of quarterly leasing, followed by flexible workspace operators at 23.8% and IT and ITeS companies at 20.3%.
Net absorption continued to outpace new supply during the quarter. Mumbai added 1.11 million sq ft of office space, primarily across the Eastern Suburbs and SBD North, taking total stock to 163.8 million sq ft. Overall vacancy fell 10 basis points quarter-on-quarter to 10.8%, its lowest level in 16 years.
Tight availability also supported rental growth. Gross rents increased 1% quarter-on-quarter and 3.4% year-on-year. The Eastern Suburbs led quarterly rental growth at 1.71%, followed by SBD BKC at 1.41% and the Western Suburbs at 1.38%.
JLL said capital values continued to track rental growth, increasing the attractiveness of both core and value-added investment opportunities, as well as under-construction assets in key office clusters.
Looking ahead, JLL expects occupier demand to be supported by significant pre-commitments in new developments. However, some ongoing transactions are seeing delayed decisions as companies assess the impact of geopolitical uncertainty and AI on their operations and workforce requirements.
The consultancy estimates annual office supply of around 8 million sq ft in the medium term, against expected annual net absorption of 7.5 million to 7.7 million sq ft. BFSI, IT/ITeS, flexible workspace and consulting firms are expected to remain key demand drivers.