Office Market on Track for Record 90+ MSF Gross Leasing in 2025: Cushman & Wakefield

Gurugram, July 7, 2025: The office real estate market continues to demonstrate robust growth. According to Cushman & Wakefield’s Q2 India Office Market Report, gross leasing volume (GLV) in the top eight cities reached 21.4 mn sq feet (MSF) in Q2, reflecting a five per cent quarter-on-quarter growth while no significant change YoY.

With H1 2025 gross leasing now at 42 MSF, the sector is firmly on track to surpass 90 MSF of annual leasing activity, a new benchmark and a reaffirmation of sustained occupier confidence.

This momentum follows 2024’s historic performance of 89 MSF with H1 2024 figures comparable to this year’s. If trends hold, 2025 will mark the second consecutive year of 85-plus MSF of gross leasing, reinforcing a new baseline of market performance.

The strong leasing numbers reflect the depth of demand from global and domestic occupiers with Global Capability Centres (GCCs), IT-BPM firms, flex operators, BFSI and engineering and manufacturing companies driving growth.

GLV, which factors in all leasing activity in the market, including fresh take-up, open market renewals by corporates and pre-leasing, is an indication of overall market activity.

In terms of cities, Bengaluru (5.0 MSF), Delhi NCR (4.6 MSF) and Mumbai (3.9 MS) collectively contributed around 63 per cent of the quarterly leasing volume. The other cities followed with Pune (3.3 MSF), Chennai (2.2 MSF), Hyderabad (1.7 MSF), Kolkata (0.5 MSF) and Ahmedabad (0.2 MSF).

Net absorption, a key indicator of real estate demand in terms of expansion of occupied space in the market, stood at 13.5 MSF in Q2, marking a 19 per cent YoY growth and totalled 27.8 MSF for H1 2025. Delhi NCR (5.2 MSF), Pune (4.3 MSF), and Chennai (3.1 MSF) posted their highest-ever half-yearly net absorption, reflecting long-term occupier confidence in the Indian office market.

Fresh leases accounted for 77 per cent of total leasing activity in H1 2025, a trend that has consistently remained above the 70 per cent mark since late 2022. Notably, pre-commitments rose to 10 per cent, suggesting a supply crunch in core markets and heightened occupier urgency.

GCCs continued to be a major demand driver, contributing 24 per cent of the overall leasing activity in the quarter at 5.1 MSF. Bengaluru (1.6 MSF) and Pune (1.6 MSF) accounted for 63 per cent of this leasing.

H1-25 marked a historic high for GCC leasing in the first half of any year with 11.4 MSF transacted, up three per cent YoY. IT-BPM held the largest share at 40 per cent, followed by E&M GCCs with a share of 36 per cent.

Sectoral Trends

In terms of sectoral demand, the IT-BPM sector retained its position as the largest occupier, accounting for 34 per cent share of GLV in Q2, translating to over 7 MSF—the sector’s second-highest quarterly volume since the pandemic. This was followed by the flex workspace operators with an 18 per cent share, showing a notable 50 per cent QoQ growth.

On a half-yearly basis, IT-BPM accounted for 32 per cent of H1-25 leasing, followed by BFSI and flex segments with 16 per cent share each. Engineering and manufacturing contributed to 13 per cent of the demand in H1-25.

Supply, Vacancy and Rentals

The office market across the top eight cities saw an influx of 12.5 MSF of new completions in Q2, a strong 53 per cent increase YoY and a 17 per cent QoQ growth.

On a half-yearly basis, the new supply touched 23.2 MSF, marking a 14 per cent YOY growth. Over 60 per cent of this H1 supply was concentrated in Bengaluru and Pune with Pune emerging as the frontrunner. The city delivered 4.8 MSF in Q2 alone, accounting for 38 per cent of the quarterly supply. Pune’s H1 supply touched 8.0 MSF, marking its highest ever supply in any half-year.

Since the new supply of 23.3 MSF stood much lower than the net absorption of over 28 MSF, the gap in demand-supply has led to a sharp fall in vacancy rate to the tune of 230 basis points in H1 2025. Cities such as Bengaluru, Pune, Mumbai and Chennai are witnessing tight vacancy rates, potentially signalling an upward pressure on rents.

Rents saw upward pressure in core districts across all major cities, led by Hyderabad and Mumbai, which posted a 15–16 per cent growth YoY.

Anshul Jain, CEO, India, SEA & APAC Tenant Representation, Cushman & Wakefield, said “India’s office market continues to outperform global peers underpinned by a solid economic outlook and long-term occupier confidence. Our forecast of more than 90 million square feet of gross leasing this year reflects the sector’s structural strength—particularly as we see sustained growth in sectors like technology, BFSI and engineering.”

The GCC segment continues to be a key driver of demand contributing a record 27 per cent of total leasing in H1. These centers are maturing in complexity and scale, and India’s deep talent pool and improving infrastructure continue to reinforce its positioning as a global hub, he added.

“At the same time, we are seeing more diverse sources of demand from domestic corporates, financial institutions and flex players. As we head into H2, we expect this momentum to continue—buoyed by easing inflation, expected rate cuts and the continued evolution of India as a strategic business location.”

Veera Babu, Executive MD, Tenant Representation, Cushman & Wakefield, said, “The market has seen strong momentum and is well on track to reach 90 million square feet this year—setting a new milestone for Indian real estate. With 42 million square feet already leased in H1, and a robust pipeline of active deals, it’s clear that demand remains broad-based and resilient.”

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, he added.

“But supply is lagging in core locations, creating a landlord’s market. 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.”