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%

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