India's Office Real Estate Market Booms: Rentals Rise and Vacancies Drop
India's commercial office real estate sector is experiencing a strong resurgence, with average rentals increasing by 6% and vacancy rates declining to 16.20% across major cities. The market is being driven by Global Capability Centres, IT, coworking, and BFSI sectors.
Office RentalsVacancy RatesCommercial Real EstateGlobal Capability CentresNet AbsorptionReal Estate NewsOct 30, 2025
Vacancy levels have also seen a notable decline, dropping from 16.70% in 9M 2024 to 16.20% in 9M 2025. This decline is a strong indicator of robust leasing activity, even as new office completions increased during the period. Chennai recorded the lowest office vacancy at 8.9%, while Hyderabad and NCR continued to see relatively higher vacancy levels.
Net office absorption across the top seven cities soared 34% year-on-year, reaching a record 42 million sq. ft. This figure surpasses pre-pandemic levels by 30% compared to the same period in 2019. Pune emerged as the standout performer, recording a staggering 97% jump in net absorption—from 3.14 million sq. ft. in 9M 2024 to approximately 6.2 million sq. ft. this year.
Bengaluru led in absolute terms with nearly 9.95 million sq. ft. of office space leased, followed by Delhi-NCR (8.2 million sq. ft.) and MMR (6.6 million sq. ft.). Kolkata was the only city to record a decline, with leasing down 19% year-on-year.
Multiple factors are driving office space demand in the country despite all headwinds. Global Capability Centres (GCCs) are a major growth driver, accounting for over 40% of total gross leasing, or about 23.34 million sq. ft., in 9M 2025. Bengaluru, Pune, and Chennai saw the strongest leasing momentum from GCCs.
Supply trends remained healthy with new office completions rising 15% during the same period—from 34.07 million sq. ft. in 9M 2024 to 39.21 million sq. ft. in 9M 2025. Pune once again topped the charts, witnessing an impressive 168% jump in new completions. Bengaluru led in total new supply at 10.41 million sq. ft., while NCR doubled its new office stock with an 80% increase. However, Hyderabad and MMR were exceptions, witnessing declines of 39% and 41%, respectively, in new completions.
Sector-wise, IT/ITeS continued to dominate leasing activity, accounting for 27% of total absorption, followed by coworking spaces (23%) and BFSI (18%). The share of coworking operators grew from 21% last year to 23%, reflecting the growing preference for flexible, hybrid workspaces among corporates and start-ups alike.
Several companies are now looking for high-quality Grade A office spaces with better infrastructure and amenities, and green-certified sustainability features. This has also increased the demand for new office spaces equipped with these amenities and features.
With sustained demand from GCCs, flexible workspace operators, and domestic enterprises, India’s office market shows no signs of slowing down. The steady rise in rentals, declining vacancy, and robust absorption point to a healthy, supply-driven growth cycle that is likely to persist into 2026.
Frequently Asked Questions
What is the current trend in office rentals in India?
Office rentals in India have increased by 6% across the top cities, with Bengaluru leading the surge at a 9% annual increase.
How have vacancy rates changed in the office real estate sector?
Vacancy rates have declined from 16.70% in 9M 2024 to 16.20% in 9M 2025, indicating strong leasing activity.
Which city has the lowest office vacancy rate?
Chennai recorded the lowest office vacancy rate at 8.9%.
What are the major drivers of office space demand in India?
Global Capability Centres (GCCs), IT/ITeS, coworking spaces, and BFSI sectors are the major drivers of office space demand.
What is the outlook for India’s office market in the coming years?
The outlook for India’s office market is positive, with sustained demand from GCCs, flexible workspace operators, and domestic enterprises. The market is expected to continue its healthy, supply-driven growth cycle into 2026.
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