India's Office Leasing Surges 40% in H1 2025: Bengaluru Leads the Charge

India's commercial real estate sector experienced a significant boost in the first half of 2025, with net leasing increasing by 40% year-on-year to reach 26.8 million square feet across the top seven cities, according to a report by ANAROCK, a leading real estate consultancy.

Bengaluru maintained its leadership with an impressive 6.55 million square feet of absorption, while Pune emerged as the fastest-growing market, recording a remarkable 188% growth. Hyderabad followed with the second-highest leasing at 4.7 million square feet, and Pune came in third with 5.7 million square feet. Delhi NCR, the Mumbai Metropolitan Region, Chennai, and Kolkata also contributed to the overall growth, with varying degrees of performance.

Pune's exceptional performance is attributed to the completion of several large-scale IT parks and increased corporate expansion into the city as a cost-effective alternative to Mumbai. The city contributed 31% of the total supply and delivered 5.7 million square feet, a substantial increase from just 0.9 million square feet in H1 2024.

On the other hand, the Mumbai Metropolitan Region (MMR) experienced a 45% decline to 1.9 million square feet, primarily due to land acquisition challenges, regulatory delays, and developers' preference for refurbishment over new construction in the saturated Mumbai market. Delhi NCR, however, reported a 35% year-on-year growth, registering 3.7 million square feet of new supply. Kolkata remained marginal with minimal supply addition of 0.1 million square feet, reflecting limited corporate demand and slower economic activity in the area.

New office supply increased by 25% to 24.51 million square feet, contributing to balanced market dynamics. Vacancy rates improved marginally to 16.3%, and average rentals grew by 4% to INR 88 per square foot per month. The IT-ITeS sector dominated with a 29% market share, followed by co-working spaces at 22%.

The IT-ITeS sector has marginally expanded its transaction share to 29% in H1 2025 from 28% in H1 2024. Co-working space providers have sustained their strong market position at 22%, representing a modest 1% increase from the previous year, driven by continued demand for flexible workspace solutions and expansion by established operators.

The BFSI sector has maintained consistent performance at 18%, driven by the expansion strategies of domestic banks and the establishment of new financial technology centers. E-commerce companies have increased their footprint to 4% from 3%, reflecting the sector's expansion plans following growing consumer spending patterns. Consultancy businesses have grown to 9%, benefiting from increased demand for professional services and advisory capabilities.

However, the manufacturing and industrial sector experienced a notable decline to 13% from 15%, primarily due to cautious expansion strategies amid global supply chain uncertainties. The miscellaneous category decreased to 5% from 8%, indicating consolidation within traditional office-using sectors and more focused leasing strategies across emerging industries.

Peush Jain, MD - Commercial Leasing & Advisory, ANAROCK Group, commented, 'The robust growth in office leasing across major cities reflects the resilience and adaptability of the commercial real estate sector. The IT-ITeS sector's continued dominance, along with the strong performance of co-working spaces and BFSI, underscores the evolving dynamics of the market.'