India’s office real estate market closed 2025 with one of its strongest performances on record, driven by robust occupier demand, a surge in leasing activity and strong demand from Global Capability Centres (GCCs). While the fourth quarter presented mixed signals with quarterly net absorption down slightly, the full year told a very different story, reinforcing India’s position as one of the most dynamic corporate office markets globally.
Full-Year Strength Outshines Quarterly Fluctuations
Across India’s top eight office markets, the full year net absorption reached an unprecedented 61.4 million square feet, up about 25 percent compared with 2024. That figure, the strongest annual uptake on record, reflects companies’ continued expansion plans and strong occupier confidence in India’s growth prospects.
Net absorption measures actual space taken up — either new space or existing space re-leased — and is a critical barometer of market health. Even though net absorption in the fourth quarter (15.7 million square feet) showed a modest decline both quarter-on-quarter and year-on-year, the broader annual picture was one of sustained strength.
Leasing Activity Remains Elevated
Gross leasing volumes (GLV) — which include new deals, renewals and expansions — remained extremely strong in Q4, registering approximately 24.7 million square feet of office space take-up. This was the second-highest quarterly leasing figure ever recorded, underscoring how occupier engagement remained consistent even as some markets moderated.
For the full year, GLV topped 88.7 million square feet, a new annual high and a testament to broad-based market momentum across India’s leading office hubs. The record leasing activity came despite global economic uncertainties and policy concerns, proving the resilience of the Indian office sector.
What’s Driving Demand
Multiple occupier categories supported leasing activity in 2025, helping diversify demand beyond traditional users. The IT-BPM sector accounted for around 31 percent of annual leasing, but flex operators, BFSI (banking, financial services and insurance) firms, and engineering & manufacturing companies also contributed significantly to demand.
A standout trend has been the rising prominence of GCCs, which accounted for a record 42 percent of gross leasing volume in Q4 and about one-third of annual leasing. GCCs — large shared services operations for multinational companies — increasingly view India as a hub for innovation, technology and back-office operations. Their rising demand is reshaping office real estate patterns.
City-Level Performance Differences
Office leasing and absorption varied across markets, reflecting regional dynamics and sectoral preferences. Bengaluru led quarterly net absorption with a near one-third share, followed by Hyderabad and Mumbai in Q4. This aligns with broader national trends showing these cities as perennial favourites for office demand, owing to strong talent pools and technology sector presence.
Some markets also stood out for their rapid growth in leasing activity. For example, Pune and Ahmedabad recorded notable quarterly increases in gross leasing, reflecting how companies are broadening their footprints beyond traditional metros.
Supply Growth and Market Balance
Developers responded to demand with increased completions. In Q4 2025, some 15.3 million square feet of office space was completed, with Hyderabad and Bengaluru accounting for a significant share. For the full year, total new supply hit a record approximately 53 million square feet.
Despite this brisk rise in supply, vacancies continued to tighten in most cities, a sign that demand remained strong enough to absorb new space. Vacancy rates are a key metric for landlords and developers because they influence rental dynamics and investment decisions.
Rental Growth Trends
As leasing and absorption strengthened, office rentals across India’s prime markets continued to rise. Sustained occupier interest and tightening vacancies supported this trend in Q4 and throughout 2025, with rental growth expected to stay positive into 2026.
Rising rents reflect both incremental demand and the premium placed on high-quality, modern office spaces that appeal to global companies and expanding domestic firms alike.
Outlook for 2026 and Beyond
Looking ahead, the market outlook remains positive. A strong active deal pipeline and sustained occupier interest suggest that leasing momentum could continue in early 2026. Developers, landlords and institutional investors are all watching closely, adjusting their strategies to tap ongoing growth and capitalize on emerging opportunities.
Even with some quarterly fluctuations, the broader takeaway from Q4 and the full year 2025 is that India’s office market demonstrates depth, resilience and strategic relevance. Demand drivers such as GCC expansion, growth in IT-BPM and flexibility in workspace preferences are likely to support continued expansion across major and emerging office centres.
A Broader Narrative of Institutional Confidence
Strong leasing activity, combined with record absorption and rising rents, points to renewed institutional confidence in India’s commercial real estate market. Large transactions, including corporate expansions and long-term leases, show that businesses are planning ahead rather than reacting to near-term uncertainty.
Taken together, the data from Q4 and the full-year performance of 2025 suggest that India’s office market is both maturing and expanding — offering opportunities for occupiers, developers and investors alike.
