India’s office real estate sector is gearing up for a transformative year in 2025, with projections indicating that gross leasing activity will surpass 90 million square feet. This ambitious forecast, presented by Cushman & Wakefield in their Q2 India Office Market Report, underscores the robust confidence among occupiers in the country’s top urban centers.
Key Cities Drive Leasing Momentum
The momentum in office leasing is largely driven by key cities such as Bengaluru, Delhi NCR, and Mumbai, which collectively accounted for over 60% of the leasing activity in Q2 2025. Bengaluru led with 5.0 million square feet (MSF) leased, followed by Delhi NCR with 4.6 MSF, and Mumbai with 3.9 MSF. Pune, Chennai, Hyderabad, Kolkata, and Ahmedabad also made significant contributions to the leasing volume.
Delhi NCR showed remarkable growth with a 68% quarter-on-quarter increase, while Pune and Chennai posted significant year-on-year increases of 13% and 25%, respectively. Although Hyderabad and Mumbai experienced sequential declines, the overall market dynamics remain strong.
| City | Leasing Volume (MSF) |
|---|---|
| Bengaluru | 5.0 |
| Delhi NCR | 4.6 |
| Mumbai | 3.9 |
| Pune | 3.3 |
| Chennai | 2.2 |
| Hyderabad | 1.7 |
| Kolkata | 0.5 |
| Ahmedabad | 0.2 |
Net Absorption Reflects Expansion
The net absorption, which indicates the demand for real estate based on expanded occupancy, reached 13.5 MSF in Q2, a 19% increase year-on-year. The cumulative net absorption for the first half of the year stood at 27.8 MSF, with Delhi NCR, Pune, and Chennai recording their highest-ever absorption figures.
Anshul Jain, Chief Executive of India, SEA & APAC Tenant Representation at Cushman & Wakefield, commented, “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 sq ft of leasing this year reflects the sector’s structural strength.”
Sectors Leading Demand
Global Capability Centres (GCCs), IT-BPM, and flex space operators are leading the demand for office space. GCCs alone accounted for 24% of Q2 leasing, with Bengaluru and Pune being significant contributors. The IT-BPM sector maintains its dominance with a 34% share of Q2 gross leasing volume, marking the second-highest quarterly volume since the pandemic began.
Veera Babu, Executive Managing Director, Tenant Representation at Cushman & Wakefield, stated, “With 42 million sq ft already leased and a strong pipeline ahead, we are well on course for a record-breaking year. The growing gap between demand and supply in key markets is tilting the balance in favour of landlords.”
Supply and Rent Dynamics
The market saw a significant influx of 12.5 MSF of new supply in Q2, up 53% year-on-year. Pune led the supply surge, contributing 38% of the quarterly new supply. However, the total supply for the first half of the year lagged behind the net absorption, leading to a drop in vacancy rates and putting upward pressure on rental rates across major cities.
Q1: How is India’s office leasing sector expected to perform in 2025?
A1: It is expected to surpass 90 million square feet, driven by strong demand in major cities and key sectors like GCCs and IT-BPM.
Q2: Which cities are leading in office leasing activity?
A2: Bengaluru, Delhi NCR, and Mumbai are at the forefront, collectively accounting for over 60% of leasing activity.
Q3: What sectors are driving office space demand?
A3: GCCs, IT-BPM, and flex space operators are the primary drivers, with IT-BPM leading in overall leasing volume.
Q4: How are vacancy rates and rents being affected?
A4: Vacancy rates are dropping due to high absorption rates, which is leading to increased rental rates, especially in cities like Hyderabad and Mumbai.
Q5: What is the outlook for the second half of 2025?
A5: The outlook remains optimistic with expectations of easing inflation and potential interest rate cuts, which could further boost leasing activity.
In conclusion, as India continues to emerge as a strategic global business destination, the office leasing market is set for significant growth, driven by key urban centers and dominant sectors. Occupiers are advised to act swiftly amidst rising demand and tightening supply.