India’s Office Real Estate on a Historic Trajectory

India’s office leasing market is poised to achieve a record-breaking 90+ million square feet of gross leasing in 2025, according to Cushman & Wakefield’s latest Q2 India Office Market Report. This follows an already robust performance in 2024 when gross leasing touched ~89 million square feet.

“India’s office market continues to outperform global peers, underpinned by a solid economic outlook and long-term occupier confidence,” said Anshul Jain, Chief Executive, India, SEA & APAC Tenant Representation, Cushman & Wakefield.

Quarterly and Half-Yearly Leasing Volumes

Gross leasing volume (GLV) for the first half of 2025 stood at ~42 million sq ft, reflecting consistent occupier demand. Notably, Q2 2025 clocked 21.4 MSF, a 5% quarter-on-quarter growth.

Gross Leasing Volume by City (MSF)

Demand Drivers: Technology, GCCs, and Flex Spaces

Global Capability Centres (GCCs) remain a primary engine of growth, contributing 24% of quarterly leasing and hitting their highest-ever H1 leasing volume (11.4 MSF).

“The growth is being fuelled by a convergence of trends—expansion of existing occupiers, rapid scaling of GCCs, and entry of new domestic and global firms,” noted Veera Babu, Executive Managing Director, Tenant Representation, Cushman & Wakefield.

Sectoral Contribution (H1 2025):

• IT-BPM: 32%
• BFSI: 16%
• Flex Spaces: 16%
• Engineering & Manufacturing: 13%

Net Absorption Reaches 27.8 Million Sq Ft in H1

Net absorption—a key indicator of fresh demand—stood at 13.5 MSF in Q2 2025, growing 19% year-on-year.

Net Absorption by City (MSF)

Tight Supply, Falling Vacancy Rates, Rising Rents

New completions reached 12.5 MSF in Q2 2025, a 53% increase year-on-year. However, this lagged behind net absorption, leading to a 230 basis points fall in vacancy during H1.

Pune emerged as the supply leader, delivering 8.0 MSF in H1—the highest in any half-year.

Rental trends show upward pressure in all core markets, led by Hyderabad and Mumbai, where rents rose 15–16% year-on-year.

Quick Stats Box

• H1 2025 Gross Leasing: ~42 MSF
• Forecast 2025 Leasing: 90+ MSF (record high)
• Top Demand Drivers: IT-BPM, GCCs, Flex Spaces
• Vacancy: Tightening in Bengaluru, Pune, Mumbai, Chennai
• Rents: Rising across core micro-markets

Outlook: Sustained Momentum Into H2 2025

With pre-commitments rising to 10% of leasing activity, landlords are gaining pricing power. Cushman & Wakefield expects the second half to maintain strong activity as occupiers secure quality spaces ahead of further rental escalations.

“Occupiers looking for high-quality space need to act early, especially as pre-commitments are on the rise and rentals are climbing in prime markets,” advised Veera Babu.

Also Read: Why Commercial Real Estate Investors Are Betting On Office Spaces

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India’s office real estate sector recorded its seventh consecutive quarter of declining vacancy, as tight supply and robust occupier activity drove the national average vacancy rate to 15.7% in Q1 2025, down 55 basis points (bps) from the previous quarter and 275 bps since Q2 2023, according to Cushman & Wakefield’s Q1 2025 India Office Market Report.

Limited New Completions Across Most Markets

New office space completions fell short of expectations in Q1 2025, totaling 10.7 million sq. ft. (MSF) — a drop of 13% year-on-year and 27% quarter-on-quarter, due to delays in project timelines and occupancy certifications.

New Supply by City (MSF)

86% of new supply came from just three cities: Bengaluru, Pune, and Delhi-NCR.

Vacancy at Multi-Year Lows

Despite moderate supply additions, vacancy dropped in six out of eight markets, most notably in Mumbai (down 227 bps) and Kolkata (down 140 bps).

Vacancy Rates – Q1 2025

Leasing Activity Stays Strong

Total gross leasing volume (GLV) in Q1 2025 touched 20.3 MSF, up 5% YoY and on par with the two-year average. Fresh leasing accounted for 80% of all transactions, continuing a three-quarter trend of steady expansion by occupiers.

Top Leasing Markets (GLV in MSF)

• Bengaluru: 4.86
• Mumbai: 4.31
• Pune: 3.49
• Delhi NCR: 2.75
• Hyderabad: 2.59
• Chennai: 1.97
• Kolkata: 0.26
• Ahmedabad: 0.07

Pre-commitments more than doubled quarter-on-quarter, reflecting strong future sentiment.

Net Absorption Rises Sharply

Net absorption — a key metric of market demand — hit 13.4 MSF, marking a 20% YoY rise and the third-highest quarterly figure ever.

• Delhi NCR, Mumbai, and Bengaluru accounted for 63% of this.
• Pune saw its highest-ever net absorption.
• Delhi NCR posted its strongest figure since Q4 2019.

Who’s Leasing? Sectoral Trends

The IT-BPM sector remained dominant, but Global Capability Centres (GCCs) are fast gaining ground.

Share of Gross Leasing Volume by Sector

Bengaluru led in GCC leasing with 37% share, followed by strong growth in Pune and Hyderabad.

Rents Move Up in High-Demand Markets

Demand outpaced supply in several cities, pushing up rentals:

• Mumbai saw the steepest rental rise at 10% QoQ
• Hyderabad, Ahmedabad, Delhi-NCR, and Chennai saw 2–4% QoQ growth

Expert Outlook

Anshul Jain, Chief Executive, India & SEA, said:

“India’s office market continues to build on strong fundamentals. The rise in GCC leasing, along with sustained demand and healthy supply pipelines, reflects global confidence in India’s business environment.”

Veera Babu, Executive Managing Director, added:

“Vacancy rates are now at a four-year low. With over 40 MSF of active demand, competition for premium office space will intensify, particularly in centrally located business districts.”

Looking Ahead

• Vacancy expected to tighten further amid supply lag
• Rental growth likely to sustain in high-demand micro-markets
• Strong pipeline of 40+ MSF expected to drive activity for the next 3–4 quarters

Also Read: Coworking Share in Office Real Estate at 27%

The post India Office Market Sees 7 Straight Quarters of Vacancy Decline appeared first on Square Feat India.

Mumbai, 23rd January 2025: Net absorption of commercial office space across India’s top six markets is projected to exceed 60 million square feet (msf) in FY2026, the highest ever, according to a report by ICRA. The cities—Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai Metropolitan Region (MMR), and Pune—are expected to achieve a 3-4% increase in absorption over FY2025’s estimated 59-60 msf.

Despite a surge in new office space supply of 125-130 msf across FY2025 and FY2026, vacancy levels are anticipated to decline to 14-14.5% by March 2026, marking a multi-year low. This trend is driven by robust demand from global capability centers (GCCs), domestic corporates, increased physical occupancy in offices, and revival in IT-SEZ spaces due to regulatory changes.

“Leasing activity has remained resilient, with net absorption reaching approximately 54 msf in FY2024 and 44 msf during the first nine months of FY2025. Vacancy levels dropped by 70 basis points to 14.7% as of December 2024, compared to March 2024. By March 2026, occupancies in the top six markets are expected to reach a decade-high of 85.5-86%,” said Anupama Reddy, Vice President and Co-Group Head – Corporate Ratings, ICRA.

India’s Office Market Resilient Amid Global Slowdown

The Indian office market has defied global economic sluggishness due to its cost-effective, highly skilled workforce, a growing domestic economy, and competitive rental prices. These factors continue to attract global firms, strengthening India’s position as a preferred real estate investment destination.

ICRA expects the credit profiles of office space operators to remain stable, supported by an increase in net operating income (NOI). The debt-to-NOI ratio for operators is forecasted to improve to 3.9-4x by March 2026, compared to 4.3-4.4x by March 2025. Debt service coverage ratios (DSCR) are projected to rise to 1.45-1.5x in FY2026 from 1.35x in FY2025.

Retail Malls See Growth Amid Challenges

Retail mall operators are also expected to witness growth, with rental income projected to increase by 7-8% year-on-year in FY2025 and 8-9% in FY2026. New mall supply of 9-9.5 msf each year in FY2025 and FY2026 is expected to stabilize vacancy levels at 21% as of December 2024 and maintain occupancy rates of 79-80% through March 2026.

“Retail consumption growth is expected to moderate to 6-7% in FY2025 due to the General Elections, weather disruptions, and the impact of extended monsoons. However, a rebound is anticipated in H2 FY2025, driven by the festive and wedding seasons. Segments such as food, apparel, accessories, and hypermarkets will continue to drive growth,” added Reddy.

Despite the positive outlook, challenges persist for retail mall operators, including the growing competition from e-commerce and q-commerce platforms, which are increasingly impacting even premium brands in the fashion segment.

ICRA estimates the debt-to-NOI ratio for mall operators to improve to 4.2-4.5x by March 2026 from 4.6-4.8x in March 2025, driven by rising NOI levels. DSCR is expected to remain stable at 1.45-1.5x during FY2025-FY2026, indicating a healthy financial outlook for the sector.

Conclusion

The sustained growth in India’s office and retail real estate markets underscores the country’s resilience and potential as a global investment hub, driven by its robust economic fundamentals and growing demand for quality commercial spaces.

Bengaluru office demandAlso Read:

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India’s office market has achieved a groundbreaking milestone in 2024, registering a record 49.56 million square feet (sq. ft.) in net absorption, marking a historic high. The year culminated with an extraordinary fourth quarter (October-December 2024), which saw net absorption hit 18.53 million sq. ft., the highest ever recorded in a single quarter.

The performance of India’s top seven cities—Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune—was exceptional, with Bengaluru maintaining its market-leading position. The city saw its best-ever net absorption of 14.74 million sq. ft. in 2024, reflecting a remarkable 63.6% year-on-year growth. Other key cities also posted impressive growth, with Delhi NCR and Hyderabad recording net absorption increases of 30.3% and 6.1%, respectively.

In total, the four leading cities—Bengaluru, Delhi NCR, Hyderabad, and Mumbai—accounted for 77.8% of the national net absorption in 2024. The surge in leasing activity underscores a strong demand for office spaces, particularly driven by global companies expanding their presence in India.

Record Leasing Volumes and Robust Occupier Demand

The Indian office market also saw record-breaking leasing activity in 2024, with gross leasing volumes reaching 77.22 million sq. ft., a 22.6% year-on-year increase. Global companies played a significant role in driving this growth, accounting for 58.6% of the leasing activity. Global Capability Centres (GCCs) emerged as a major contributor, securing around 28 million sq. ft., representing 35.9% of the leasing volumes.

The fourth quarter of 2024 saw the highest ever gross leasing volume in a single quarter, with 23.80 million sq. ft. leased. Bengaluru led this performance, with 7.87 million sq. ft. leased in Q4, followed by Delhi NCR, Hyderabad, and Mumbai. This surge in leasing was further driven by the rising demand for flexible workspaces, which saw leasing activity in this segment jump by 50% year-on-year.

Bengaluru’s Dominance in the Market

Bengaluru’s dominance in India’s office market was evident in both quarterly and annual figures. In Q4, the city accounted for 36.1% of the total net absorption, with a record-breaking 6.69 million sq. ft. absorbed. Its total net absorption for 2024 was 14.74 million sq. ft., a 63.6% increase from the previous year. Other cities, such as Delhi NCR, Hyderabad, and Mumbai, also saw robust growth, but Bengaluru continued to lead in both net absorption and gross leasing.

Vacancy Rates Decline

The vacancy rate across the top seven cities dropped to a three-year low of 16.3%, down by 60 basis points quarter-on-quarter. This decline is a result of the historic net absorption figures, supported by a balanced supply of office space. Vacancy rates fell across most cities, with the exception of Pune.

Looking Ahead: Continued Growth on the Horizon

India’s office market is poised for continued growth in the coming years. The expansion of GCCs, driven by a focus on AI, emerging technologies, and R&D, will continue to fuel demand for office space in core markets. The growth of flexible workspaces and increasing demand from sectors like financial services, manufacturing, and tech outsourcing will further bolster the market. India’s position as a key hub for global companies, particularly in the areas of talent availability and innovation, positions it for sustained office market success.

With strong performance across major cities and the continued influx of global occupiers, India’s office market is expected to maintain its upward trajectory in 2025 and beyond.

Also Read: 87% of Indian occupiers want half of office portfolios powered by renewables by 2030

The post India’s Office Market Reaches Record Heights in 2024, Surpassing 49 Million Sq. Ft. in Net Absorption appeared first on Square Feat India.

In Q3 (July-September 2024), gross leasing activity amounted to 19.89 million sq. ft, an increase of 8.2% quarter-on-quarter, making it the second-highest quarterly leasing volume ever, surpassed only by Q4 2023. Notably, the flex segment emerged as the largest contributor, accounting for 22% of quarterly leasing activity.

Global Capability Centres (GCCs) dominated the market, driving 36.2% of leasing activity. Global occupiers represented 56.8% of Q3 leasing volumes, while domestic firms accounted for 44.5% in the first nine months of 2024.

Bengaluru maintained its leading position in leasing activity, with a 24.6% share in Q3, followed by Delhi NCR at 23.1%. Mumbai and Hyderabad also showed strong performance with shares of 15.6% and 14.9%, respectively. Together, these four cities accounted for nearly 50% of India’s gross leasing activity during January-September 2024.

In terms of net absorption, the top seven cities recorded 12.16 million sq. ft in Q3, a 14.9% increase quarter-on-quarter. Bengaluru led with a 34.1% share, followed closely by Delhi NCR, Mumbai, and Pune.

The robust demand for office space in India reflects both global expansion plans and the resilience of the domestic economy, with significant activity expected to continue in the coming months.

Also Read: Office Demand Surges with 47 Million Square Feet Leased in First Nine Months of 2024

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