India's Office Leasing Surges 40% in H1 2025, Bengaluru Leads with Tech and Corporate Demand
India's office leasing market has seen a significant 40% increase in the first half of 2025, with Bengaluru leading the way with 6.55 million square feet leased. The growth is driven by IT, GCCs, and flexible workspaces, reflecting strong corporate confidence in commercial real estate.
Office LeasingCommercial Real EstateBengaluruIt SectorGccsReal EstateAug 29, 2025
In the first half of 2025, India has recorded a 26.8 million square feet of net office absorption across the top seven cities, up from the 19.08 million square feet that was recorded in the first half of 2024, a 40% year-on-year jump. This value comes after a 25% rise in new office supply, where 24.51 million square feet were delivered during this period, which helps to maintain a healthy balance between supply and demand. The office vacancy rate had improved slightly, dropping to 16.3%, indicating a tighter market condition, yet manageable availability. The average rental price also increased by 4%, standing at Rs. 88 per square foot per month, reflecting market stability, even amidst soaring demand. Large corporate tenants favour sizable office spaces, where 57% of leases in the first half cross 100,000 square feet, illustrating a preference for consolidated office footprints.
The Indian Silicon Valley has emerged as the clear leader in leasing activity, by recording an impressive 6.55 million square feet leased in the first half of 2025, a 64% increase from last year. The city’s new office supply also grew significantly, with 6.91 million square feet being developed, and representing a 26% increase in new completions. This, in turn, states Bengaluru as the prime destination for IT and technology enterprises of all sorts, aided by its strong infrastructure and valuable pool of talent. The technology sector was the most significant contributor to office space demand for Bengaluru and the country’s other key cities, accounting for 29% of leasing share across the country. The GCCs were dominant players in that group, with Bengaluru leasing about 5.45 million square feet, reflecting the city’s relative importance as a global tech hub.
Pune has shown an exceptional growth by posting a staggering 188% upsurge in the office absorption, the highest among the major cities. Pune had added approximately 3.8 million square feet of leased space compared to the 1.32 million square feet in the first half of 2024, also benefitting from a 533% increase in new office supply. Hyderabad followed as the second-highest leasing city with over 4.7 million square feet absorbed, further exemplifying the rising demand in Tier 1 and emerging Tier 2 cities. Even the cities in the NCR and Chennai have recorded a considerable leasing activity by indicating a broadly positive trend across India’s commercial real estate landscape. However, Kolkata saw a decline in net office absorption by 51%, evidencing regional market differences.
The IT and ITeS sector powers nearly 40% of the office leasing volume across India’s top cities in 2025. The growth of technology, engineering, and global services companies drives demand for modern Grade A office spaces. GCCs are leading the corporate office space demand, contributing significantly to leasing in Bengaluru, NCR, Pune, Hyderabad, and Chennai. These centers are multinational companies that are blending tech and service efforts in India. Several businesses have adopted a flexible workspace model since the pandemic that encourages using agile and tech-enabled office spaces. Increasingly, Bengaluru, the hub of technology and innovation in India, is transitioning to flexible office creatives and management of remote or satellite offices to limit commute time. There has been a 25% increase in new office buildings in 2022, and cities are creating openings to meet current occupier demand, which limits pressure on vacancy and supplies new or adjustable office space for expanding companies.
In 2025, while there are headwinds from global economic uncertainty, India’s office market continues to demonstrate significant momentum. Continued leasing volumes, stable rental growth, and decreasing vacancies are indicators that corpora are increasingly confident that India’s long-term trajectory is going to be one of considerable growth. Investors, both domestic and international, are simultaneously finding India to be an increasingly attractive destination for commercial real estate investment due to the new regulatory policies and ongoing demand across multiple groups. Multiple predictions from market specialists suggest that there exists further leasing growth for office space, driven by digital transformation and expansion of GCC facilities, along with a growing startup ecosystem. There will be ongoing excitement around the flexible workspace models and sustainable smart buildings as they bring opportunities for market transformation. While metropolitan cities such as Bengaluru and Delhi NCR will remain the anchors of Indian leasing opportunities, early indicators suggest that Tier 2 cities such as Pune and Hyderabad may also be the value players that would dominate corridors of growth in the overall economy.
Frequently Asked Questions
What is the overall growth in office leasing in India for H1 2025?
India’s office leasing space saw a 40% increase in the first half of 2025, with 26.8 million square feet absorbed across the top seven cities.
Which city led the office leasing growth in H1 2025?
Bengaluru led the office leasing growth in H1 2025, recording an impressive 6.55 million square feet leased, a 64% increase from last year.
What factors are driving the growth in office leasing?
The growth in office leasing is primarily driven by the IT and ITeS sector, expansion of Global Capability Centres (GCCs), and the move to flexible and hybrid workspaces.
How has the office vacancy rate changed in H1 2025?
The office vacancy rate improved slightly, dropping to 16.3%, indicating a tighter market condition with manageable availability.
What are the predictions for future office leasing growth in India?
Market specialists predict further leasing growth driven by digital transformation, expansion of GCC facilities, and a growing startup ecosystem, with ongoing excitement around flexible workspace models and sustainable smart buildings.
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