Office leasing across the top seven markets remained strong in Q1 2025 at 15.9 million sq ft, reflecting a 15% year-on-year (YoY) increase. Ongoing demand momentum has added credibility to the prevailing optimism in the country's office market. Bengaluru and Delhi NCR drove nearly half of the leasing activity during the quarter, as per Colliers report.
While Delhi NCR saw its highest quarterly leasing in the last 10 quarters, Chennai too witnessed a remarkable 93% YoY surge at 2.9 million square feet, driven by space take-up by technology firms. This sustained demand growth underscores the continued resilience of the country's top seven markets: Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune.
In Q1 2025, Grade A gross absorption trends show notable changes across several cities. Bengaluru saw a 13% increase, growing from 4.0 million square feet in Q1 2024 to 4.5 million square feet. Chennai experienced a significant 93% growth, rising from 1.5 million square feet to 2.9 million square feet. Delhi-NCR also saw a solid 32% increase, moving from 2.5 million square feet to 3.3 million square feet. However, Hyderabad saw a 41% decline, falling from 2.9 million square feet to 1.7 million square feet, while Kolkata recorded a 50% drop, reducing from 0.2 million square feet to 0.1 million square feet. Mumbai and Pune showed positive trends, with Mumbai increasing by 16%, from 1.9 million square feet to 2.2 million square feet, and Pune saw a 50% rise, growing from 0.8 million square feet to 1.2 million square feet. Pan India's absorption increased by 15%, from 13.8 million square feet to 15.9 million square feet.
Overall, the new supply touched 9.9 million square feet during Q1 2025, almost at par with last year's period. Bengaluru and Delhi NCR drove two-thirds of the new supply during Q1 2025. While the majority of the markets saw a decline in new supply on an annual basis, Delhi NCR and Pune witnessed multifold growth in new completions as compared to Q1 2024. Almost 90% of the new supply during Q1 2025 was concentrated in three cities, Bengaluru, Delhi NCR and Pune.
In Q1 2025, the Grade A new supply trends reflect a mix of declines and growth across various cities. Bengaluru experienced a 16% decrease, dropping from 4.4 million square feet in Q1 2024 to 3.7 million square feet. Chennai saw a 33% reduction, declining from 0.3 million square feet to 0.2 million square feet. Delhi-NCR, however, exhibited a significant surge of 440%, increasing from 0.5 million square feet to 2.7 million square feet. Hyderabad experienced a sharp 88% drop, with new supply falling from 2.6 million square feet to just 0.3 million square feet. Kolkata also saw a 50% decrease from 0.2 million square feet to 0.1 million square feet. Mumbai recorded a 60% decline, with supply falling from 1.0 million square feet to 0.4 million square feet. In contrast, Pune saw a 150% rise, growing from 1.0 million square feet to 2.5 million square feet. Overall, Pan India supply saw a slight decline of 1%, from 10.0 million square feet in Q1 2024 to 9.9 million square feet in Q1 2025.
Of the 15.9 million square feet of Grade A office space demand in Q1 2025, 86% came from conventional workspaces. Flex space leasing, meanwhile, at 2.2 million square feet witnessed a 22% YoY growth.
In Q1 2025, conventional and flex space leasing trends show notable growth in both segments. Conventional leasing saw a 14% increase, rising from 12.0 million square feet in Q1 2024 to 13.7 million square feet, maintaining an 86% share of the total leasing. Flex space leasing also experienced strong growth, increasing by 22%, from 1.8 million square feet in Q1 2024 to 2.2 million square feet, slightly increasing its share from 13% to 14%. Total leasing across both segments grew by 15%, from 13.8 million square feet in Q1 2024 to 15.9 million square feet in Q1 2025.
The technology sector continued to drive office space demand, leasing 4.4 million square feet of conventional office space during Q1 2025, accounting for 28% of the total demand for the quarter. BFSI and Engineering & Manufacturing sectors also saw strong demand, leasing 3.4 million square feet and 2.4 million square feet, respectively, making up 36% of the total conventional space uptake during the quarter.
