Office Leasing Rises 15 per cent YoY in Q1 2025 to 15.9 MSF Across Top 7 Cities

New Delhi, March 27, 2025: Office leasing across the top seven markets remained strong in Q1 2025 at 15.9 million square feet (msf), reflecting a 15 per cent year-on-year (YoY) increase. Ongoing demand momentum has added credibility to the prevailing optimism in the office market of the country. Bengaluru and Delhi NCR together drove nearly half of the leasing activity during the quarter. While Delhi NCR saw its highest quarterly leasing in the last 10 quarters, Chennai too witnessed a remarkable 93 per cent YoY surge at 2.9 million square feet, driven by space take-up by technology firms. This sustained demand growth underscores the continued resilience of the country’s top seven markets, namely Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune.

“2025 has started on a positive note, with office leasing witnessing a commendable 15 per cent year-on-year growth at 15.9 million square feet in the first quarter. Key markets are seeing strong Grade A space uptake, driven by corporate expansions, rising investments in commercial real estate, amidst promising domestic growth prospects. We anticipate the demand momentum to gain pace throughout 2025, fueled by expansionary plans of leading firms across Technology, Engineering & Manufacturing and BFSI sectors. Additionally, aided by the policy level push in major states, long-term demand for GCCs will continue to remain strong in most Tier I and select Tier II cities of the country,” says Arpit Mehrotra, Managing Director, Office Services, India, Colliers.

Overall new supply touched 9.9 million square feet during Q1 2025, almost at par with the same period last year. Bengaluru and Delhi NCR together drove two-third of the new supply during Q1 2025. While majority of the markets saw a decline in new supply on an annual basis, Delhi NCR and Pune witnessed multifold growth in new completions, as compared to Q1 2024. In fact, almost 90 per cent of the new supply during Q1 2025 was concentrated in three cities – Bengaluru, Delhi NCR and Pune.

With demand outpacing new supply across most cities, average office rentals increased annually by 8 per cent during Q1 2025. Amidst limited new supply, growth in rentals was higher in select high activity micro markets such as BKC & Andheri East in Mumbai, SBD (Madhapur, HITEC City, Kondapur & Rai Durg) in Hyderabad and NH 48 & Golf Course Extension Road in Delhi NCR. At the India level, vacancy levels meanwhile dropped by 120 basis points on an annual basis to 16.2 per cent. This was a 55 basis points decline on a sequential basis.

Of the 15.9 million square feet of Grade A office space demand in Q1 2025, 86 per cent came from conventional workspaces. Flex space leasing, meanwhile, at 2.2 million square feet witnessed a 22 per cent YoY growth.

Technology sector continued to drive office space demand, leasing 4.4 million square feet of conventional office space during Q1 2025, 28 per cent of the total demand during the quarter. BFSI and Engineering & Manufacturing demand was also healthy at 3.4 million square feet and 2.4 million square feet, together accounting for 36 per cent of the total conventional space uptake in the quarter.

“Q1 2025 saw 2.2 million square feet of flex space leasing across the top 7 cities of the country, a 22 per cent YoY increase. Leasing by flex space operators was particularly strong in Delhi NCR, Pune, and Bengaluru with these three cities together accounting for almost 80 per cent of the total flex space uptake in the quarter. Fully managed office spaces driven by enterprise-level offerings, plug & play facilities and a high degree of customisable solutions are expected to drive flex space momentum throughout 2025. Consequently, flex spaces are likely to gain further prominence, and their share in occupiers’ portfolio can potentially reach 12-15 per cent in the coming years,”, says Vimal Nadar, Senior Director and Head of Research, Colliers India.