India’s office real estate market maintained its upward trajectory in Q1 2025, driven by robust leasing and tight new supply, pushing overall vacancy down for the seventh consecutive quarter to 15.7% - a cumulatively steep drop of 275 basis points (bps) from 18.45% in Q2 2023. According to Cushman & Wakefield’s latest Q1 2025 Office Market report, supply constraints and strong occupier demand in the first quarter of the year across India’s top 8 office markets have resulted in a drop-in vacancy rate by 55 basis points (bps) to 15.7% from 16.25% in Q4 2024.
Following the report, total new office completions in Q1 2025 stood at 10.7 million sq. ft. (MSF), falling short of expectations due to delays in occupancy certifications and project timelines. This is a drop of 13% y-o-y and 27% q-o-q. Bengaluru (3.28 MSF), Pune (3.21 MSF), and Delhi-NCR (2.71 MSF) contributed a combined 86% (9.2 MSF) of this new supply. Hyderabad saw a supply of 1.32 MSF, while Mumbai registered a supply of 0.18 MSF. Cities like Chennai, Kolkata and Ahmedabad recorded no new supply, resulting in lower vacancy rates and higher rentals in these markets.
In Q1 2025, the Indian commercial real estate market witnessed notable shifts in new supply across major cities. Mumbai saw a dramatic 86.84% decline in new supply, dropping from 1.35 million square feet (msf) in Q1 2024 to just 0.18 msf. Delhi NCR experienced a marginal dip of 3.61%, while Hyderabad recorded a significant 54.81% decrease. Chennai and Ahmedabad reported a complete halt in new supply, falling by 100%. On the other hand, Bengaluru and Pune demonstrated robust growth, with new supply rising by 52.41% and 92.68%, respectively. Kolkata remained stagnant with no new supply in either period. Overall, the PAN India figure reflected a 12.66% decline in new supply, indicating a mixed performance across the country’s key markets.
Despite the new additions, low supply in most markets tightened vacancies further. Mumbai saw the steepest drop-in vacancy rates, falling by 227 bps quarter-on-quarter (q-o-q), while Kolkata followed with a 140-bps dip. Most cities, except Bengaluru and Pune, reported a decline in vacancy as supply lagged behind demand.
As of Q1 2025, vacancy rates in India’s commercial real estate sector varied significantly across key cities. Hyderabad and Ahmedabad reported the highest vacancy rates at 23.10% and 24.01%, respectively, indicating a potential oversupply or reduced demand in these markets. Delhi NCR also recorded a high vacancy rate of 21.06%, while Kolkata and Chennai stood at 17.80% and 15.91%, respectively. Mumbai, Pune, and Bengaluru showed relatively healthier market conditions with lower vacancy rates at 12.75%, 11.23%, and 9.70%, respectively, with Bengaluru registering the lowest among all. On average, the PAN India vacancy rate stood at 15.70%, reflecting a moderate balance between demand and supply nationwide.
Meanwhile, office leasing activity remained strong in the first quarter, with gross leasing volume (GLV) across the top 8 markets reaching 20.3 MSF, a 5% increase y-o-y and in line with the two-year average of 20 MSF per quarter. Fresh leasing made up nearly 80% of the activity, marking the third consecutive quarter of this trend and pointing to sustained occupier expansion. Gross leasing volume, which factors in all leasing activity in the market, including fresh take-up and open market renewals by corporates and pre-leasing, indicates overall market activity.
Bengaluru (4.86 MSF) and Mumbai (4.31 MSF) led the leasing activity, followed closely by Pune (3.49 MSF). Delhi NCR, meanwhile, recorded 2.75 MSF of leasing activity, while Hyderabad witnessed 2.59 MSF and Chennai 1.97 MSF. Kolkata and Ahmedabad saw leasing volumes of 0.26 MSF and 0.07 MSF, respectively. Notably, pre-commitments surged, more than doubling QoQ, reflecting increased occupier confidence in the market and project pipelines.
Net absorption, a key indicator of real estate demand in terms of expansion of occupied space in the market, stood at 13.4 MSF in Q1 2025, the third highest quarterly figure ever, with a growth of 20% year over year. Delhi-NCR, Mumbai, and Bengaluru collectively contributed 63% of this total, with Pune achieving its highest-ever quarterly net absorption. Delhi-NCR, meanwhile, recorded its strongest net absorption since Q4 2019.
Regarding sectoral demand, the IT-BPM sector retained its position as the largest occupier, accounting for 29% of GLV. BFSI followed at 22%, while flex space operators maintained a steady 13% share. Global Capability Centres (GCCs) grew their share to 31%, up from 28% in 2024. Bengaluru accounted for 37% of GCC leasing, with Pune and Hyderabad recording significant quarter-on-quarter growth.
Tight supply and strong demand pushed rental values upward, particularly in high-demand markets. Mumbai posted a sharp 10% QoQ increase in average rents, the highest among the top 8 cities, while Hyderabad, Ahmedabad, Delhi-NCR, and Chennai saw growth in the range of 2–4% q-o-q.
