The India office market remains firmly entrenched on the growth trajectory, with domestic occupiers ramping up their activity to record levels and leasing 8.82 million sq. ft in Q1 2025. Global occupiers continued to remain the mainstay of leasing activity, nevertheless, driven primarily by GCCs. On a year-on-year basis, gross leasing for the top seven cities was up 28.4% at the pan-India level and higher for all cities, barring Chennai.
India’s gross office space leasing witnessed a strong 28.4% year-on-year growth in Q1 2025, reaching 19.46 million sq. ft compared to 15.16 million sq. ft in Q1 2024. Bengaluru led the market with 4.26 million sq. ft leased, accounting for 21.9% of total activity, followed closely by Delhi NCR with 4.21 million sq. ft (21.6%). Pune and Hyderabad also showed impressive growth, recording 70.7% and 111.4% increases respectively, with Hyderabad’s leasing rising from 1.37 to 2.89 million sq. ft. Kolkata saw the highest percentage growth at 431.5%, albeit from a low base. Meanwhile, Chennai was the only major city to register a decline, with leasing falling 29% year-on-year.
“The Indian office market has demonstrated remarkable resilience and growth in Q1 2025, underpinned by the strongest-ever performance by domestic occupiers which was driven by flex and third-party tech firms. A strong performance by BFSI along with the aforementioned ones has propelled net absorption to 12.78 million sq ft in Q1, up 54.0% year-on-year and further highlighting the expansion-driven demand in the India office market. This coupled with a trailing 12-month (April 2024-March 2025) gross leasing of 81.5 million sq. ft, indicates that the market is poised for another potential record-breaking performance in 2025,” said Dr. Samantak Das, Chief Economist and Head of Research and REIS, India, JLL
Leasing by domestic occupiers was year-over-year higher in Bengaluru, Hyderabad, Mumbai and Pune. Flex was the dominant domestic occupier segment in Bengaluru and Pune accounting for 70.0% and 61.8%, respectively in the domestic occupier space take-up. BFSI was the biggest contributor in Mumbai while Tech was the major contributor in Hyderabad in the domestic occupiers’ leasing activity.
Gross leasing by domestic occupiers in India rose by 10.3% year-on-year in Q1 2025, reaching 8.82 million sq. ft from 7.99 million sq. ft in Q1 2024. Hyderabad led the growth with a remarkable 373.4% surge, rising from 0.32 to 1.50 million sq. ft, followed by Kolkata with a 297% increase. Pune also posted strong growth at 37.9%, while Bengaluru and Mumbai saw modest gains of 9.1% and 4.9% respectively. In contrast, Chennai and Delhi NCR recorded declines, with domestic leasing falling by 48.1% and 14.6% respectively, indicating shifting dynamics in occupier demand across key cities.
Flex and third-party tech firms drive the domestic occupier activity in Q1; GCC set-ups by global firms are the primary driver of space leasing during the quarter. With flex segment seeing the third successive quarter when it has leased ~4 million sq. ft or more and third-party tech firms quite active in Q1 2025, these two segments combined to account for a 73.1% share of domestic leasing activity.
India’s continued strength in terms of its talent pool, costs and overall tech ecosystem is a key driver for global firms to invest into their real estate growth with India as the focal point. On a year-on-year basis, net absorption was higher across all cities in Q1 2025, barring Mumbai.
With quarterly supply at 10.5 million sq. ft, headline vacancy declined to its lowest in nearly four years to 15.7%, down by 50 bps quarter-on-quarter. Vacancy in key office clusters remains in tight single digits.
With one eye on evolving global trade and economy landscape, India’s office market forecast remains on track to match 2024 peak levels
There remains a sustained runway for growth as we continue to see strong demand from global and domestic occupiers. While the growth is expected to pivot around GCC activity, domestic occupiers will likely play a bigger role, especially those from the flex, BFSI and manufacturing segments. A short-term sluggishness in market activity may be seen as firms evaluate the impact of tariffs on the global economy landscape– both implied as well as explicit. The uncertainty and the emerging business strategies may also act as a tailwind to more offshoring opportunities for India from global firms. The fundamentals seem to support India’s continued dominance as an office destination among global firms, mostly driven by its prominence as a R&D capability hub across multiple industry domains.
