AI isn’t shrinking India’s offices yet; 77% occupiers plan expansion: Report

The finding comes as AI adoption becomes increasingly common among Indian companies. The survey found that 93% of respondents report some stage of AI adoption in their firms. Yet, for most occupiers, AI has not produced a measurable change in office leasing decisions. As many as 57% said AI has had no impact on their firm’s leasing so far.

The report, titled “Adaptive Spaces: India Office Occupier Survey 2026 – How is AI Influencing Leasing Decisions?”, was published by CBRE Research on August 20. It is the eighth edition of the survey. CBRE said it collected responses from more than 200 CXOs between April and June 2026. The respondents oversee organisational portfolios across several Indian markets.

Why are companies still expanding offices?

The survey shows that companies continue to see a strong role for physical offices. About 77% of respondents reported office utilisation rates above 50%, while the same share expects their India office portfolios to grow over the next two years.

CBRE said the share of companies pursuing an aggressive expansion strategy has almost doubled from the previous year. In 2026, 30% of firms said they planned a significantly larger office footprint of more than 30% over the next two years. The report linked this expansion sentiment to sustained business growth and the continuing relevance of physical workplaces.

Almost half of surveyed occupiers plan to combine expansion with consolidation over the next 12 to 24 months. Specifically, 47% plan to pursue an expansion-and-consolidation strategy over the next two years, while about 25% plan to renew their current leases.

Among large companies, expansion plans are particularly strong. As many as 63% of large-sized firms plan to expand and consolidate their office portfolios over the next 24 months, while around 30% of large and medium-sized firms plan to renew their current leases during the same period.

Companies are also looking for better-quality space rather than simply more space. Some 55% cited moving to higher-quality buildings as their primary relocation strategy, with better lease terms or rents and suitable commute options also influencing their decisions.

Has AI changed office leasing yet?

AI has become an important factor in leasing decisions, but its effect remains limited for a majority of companies.

CBRE found that 34% of occupiers identified evolving AI automation dynamics as a factor that would affect leasing decisions over the next 12 to 24 months. This was the highest-ranked factor in the survey. Global macroeconomic uncertainties came next at 23%, followed by cross-border talent mobility restrictions at 6%.

The report said AI is prompting organisations to consider changes in talent requirements, workflows and automation as they plan their workplaces. At the same time, almost 30% of occupiers said none of the listed external factors were likely to influence their leasing decisions.

AI adoption itself remains at different stages across companies. While 59% of respondents are still at a nascent stage of adoption, 34% are at a mature stage. CBRE said almost 60% are either experimenting with AI or remain in the early stages of deployment, with companies testing proof-of-concepts and assessing wider changes before committing capital or altering physical assets.

For organisations further along the AI adoption curve, the impact is more visible. CBRE said AI has become an active operational reality for about a third of respondents, with changes in talent deployment and physical workspace use already taking place. Technology and BFSI occupiers lead AI adoption in the survey.

What does AI mean for office headcount?

The report does not show a broad expectation of falling headcount because of AI. As many as 64% of respondents have a neutral-to-positive view of AI’s effect on their workforce. Within that group, 52% have a neutral or wait-and-see position, while 12% expect AI to increase headcount.

CBRE also found that 57% of occupiers reported no measurable impact from AI on their leasing strategy. Among this group, 69% were at the no-adoption or nascent stage of AI adoption.

The report described the approach of many organisations as a wait-and-watch strategy, with workforce planning and real estate decisions increasingly likely to depend on the maturity and business impact of individual AI strategies.

“A large proportion of organisations are likely to adopt a wait-and-watch approach,” CBRE said, with AI maturity and business impact expected to shape workforce planning and real estate decisions.

The findings therefore do not show that AI has already reduced India’s office demand. Instead, they suggest that many companies are still assessing how AI will affect their workforce and workplace requirements.

Where are companies expanding?

India’s established office hubs continue to attract occupiers. As many as 85% of respondents are either already present in or considering expansion to Bengaluru, Pune or Hyderabad.

Bengaluru remains the most widely preferred destination, with 66% of occupiers either already operating in the city or planning to expand there. CBRE said Bengaluru’s appeal cuts across different occupier segments rather than depending on demand from a single industry.

Companies are also looking beyond established office markets. About 65% of respondents said access to emerging and untapped talent pools is an important criterion when evaluating Tier-II and Tier-III cities.

Multi-city expansion is also becoming common. Almost half of surveyed occupiers plan to expand into two or more cities, while another 22% plan to expand into three or more locations. Bengaluru, Hyderabad, Chennai and Pune continue to attract large requirements.

Are GCCs also expanding despite AI?

Global Capability Centres (GCCs) show a strong office expansion trend. Some 75% of GCC respondents expect their India office portfolio to grow over the next two years, while 65% expect flexible workspace to form part of their portfolio during the same period.

AI adoption is also higher among GCC respondents, with 95% reporting some stage of AI adoption. However, 64% remain at an early or exploratory stage, while 31% are at an advanced or scaled stage.

GCCs also place strong importance on location and employee access. Some 72% prioritise commute infrastructure when selecting offices, while 68% prioritise access to talent. A further 95% view traffic congestion and commuting as a threat to operations and employee experience.

What kind of offices do companies want?

The survey suggests that companies are not simply increasing space but are also changing the type of space they want. Some 67% of occupiers expect flexible workspace to form part of their portfolio within two years, up from 58% currently.

CBRE said occupiers are increasingly using a “core + flex” model, with flexible offices moving beyond their earlier role as temporary solutions and becoming part of longer-term workplace strategies. Cost management, risk reduction and workplace expectations are among the factors driving this approach.

Private managed offices are the most preferred flexible workspace format. Some 42% of respondents selected private managed offices, ahead of enterprise co-working and shared managed offices at 20% each. Among large firms, 61% prefer private managed offices.

What matters when companies choose offices?

Commute infrastructure remains a major consideration. Some 70% of respondents prioritise it when selecting offices, while 95% view traffic congestion and commuting as a threat to operations and employee experience.

Public transport access and last-mile connectivity are also concerns for 66% of respondents. These issues can directly affect building choices: 38% said they would exit, reject or seek discounts on buildings that lack public transit access.

CBRE also found demand for greater support from developers, with 75% of occupiers wanting developers to strengthen safety and security.

What is driving office demand?

CBRE said India’s office stock crossed 1 billion square feet during April-June 2026. Leasing activity has remained elevated for the past two-and-a-half years despite global uncertainty and changes linked to AI.

Expansion plans are strong across major sectors. Some 80% of surveyed BFSI firms plan to expand their office portfolios over the next two years, while 77% of surveyed technology companies plan to do the same.

Technology companies leased about 28 million square feet during the first half of 2025-26, accounting for 22% of total absorption, according to CBRE. The report linked this demand to the expansion of global technology companies and their GCCs, along with greater adoption of AI, cloud computing and digital engineering.

BFSI firms leased about 20 million square feet during the same period, accounting for 15% of total absorption. CBRE said demand came from domestic financial institutions, multinational banks, insurance companies, fintech firms and GCCs.