Kolkata Office Market Records 27% Growth in Q3 2026, Manufacturing Leasing Surges 256%

Kolkata’s office market gained momentum in the third quarter of 2026, with leasing activity rising 27% year-on-year, driven by demand from the IT and ITeS sector and a sharp increase in manufacturing-led transactions. The city also recorded its lowest office vacancy rate since 2018, alongside the fastest rental growth among India’s eight major office markets.

Between January and September 2026, Kolkata recorded 1.5 million sq ft of office leasing, making it the second-highest nine-month total since 2017. However, the figure remained 9% lower than the 1.64 million sq ft recorded during the corresponding period last year.

Quarterly Leasing Gains Pace

Office leasing activity strengthened through the first nine months of 2026. Transactions increased from 0.37 million sq ft in the first quarter to 0.46 million sq ft in the second quarter, before reaching 0.67 million sq ft in Q3.

New office supply remained limited at 0.28 million sq ft during the period, following no additions in 2025. The combination of sustained leasing demand and limited new supply has coincided with a decline in vacancy levels across the market.

Vacancy Falls as Office Rents Rise

Kolkata’s office vacancy rate declined to 26.1% in Q3 2026, compared with 31.9% a year earlier. This marked the lowest vacancy level since 2018.

Average office rents increased 13% year-on-year to ₹52 per sq ft per month, representing the fastest rental growth among India's eight major office markets. Rents were also 37% higher than their Q3 2019 levels, highlighting the upward movement in commercial property costs over the period.

Grade A office spaces continued to dominate leasing activity, accounting for 94% of total transactions.

IT and Manufacturing Drive Office Demand

The IT and IT-enabled services (ITeS) sector remained the largest contributor to office leasing in Kolkata, accounting for 47% of total transactions. Flexible workspaces represented another 27%, reflecting continued demand for adaptable office solutions.

Manufacturing emerged as a significant growth driver during the period. Leasing by manufacturing companies surged 256% to 0.23 million sq ft, increasing the sector’s share of total leasing from 5% to 15%.

The rise in manufacturing-led demand indicates a broader base of occupiers contributing to Kolkata’s commercial real estate activity beyond its established technology and services sectors.

Outlook for Kolkata’s Office Market

Kolkata’s office market is showing signs of strengthening, supported by declining vacancy, rising rents and continued demand for Grade A office spaces. While leasing volumes for January to September remained below last year’s level, the improvement in quarterly activity during Q3 points to renewed momentum.

The expansion of manufacturing leasing, alongside the continued contribution of IT, ITeS and flexible workspace operators, is adding diversity to the city’s office demand. Sustaining this momentum will depend on future occupier demand, new office supply and the ability of the market to attract businesses across sectors.

With vacancy at its lowest level since 2018 and rents recording the strongest growth among India's major office markets, Kolkata is demonstrating renewed activity in the country's commercial real estate landscape.