Robust Q2 Growth Across Major Cities
Office space demand in India surged 11% year-on-year during Q2 2025, marking another robust quarter in the country’s commercial real estate cycle. Analysts from CBRE, Colliers, and other market experts attribute the uptick largely to strong leasing momentum across leading metro areas like Bengaluru, Mumbai, Delhi‑NCR, Hyderabad, Chennai, Pune, and Kolkata, and a growing appetite for high-quality, flexible office formats such as co-working spaces and global capability centres (GCCs).
Resilience Amid Global Uncertainty
Despite economic and geopolitical volatility, ranging from rising interest rates abroad to sporadic supply chain disruptions, India’s office market has shown remarkable durability. Reports highlight strong leasing activity and rising supply creation, even as global headwinds persist. Surveys across the Asia Pacific region place India as the most resilient commercial real estate market, with sustained confidence among tenants and landlords.
Southern Powerhouses Leading the Charge
Bengaluru remains the nation’s front-runner, having absorbed an unprecedented 21.7 million sq ft of Grade-A office space in 2024, driven largely by tech, engineering, flexible workspace players, and GCCs, and is projected to lead again in 2025, contributing roughly one-third of demand. Hyderabad and Delhi‑NCR follow with expectations of 10–15 million sq ft each, while Chennai and Pune consolidate their standings around 5–10 million sq ft.
GCCs and Flex Spaces: Engines of Growth
Global Capability Centres have emerged as key demand drivers, renting approximately 28 million sq ft in 2024 alone, roughly 40% of total leasing volume. This rise reflects expanding global R&D footprints in India, with nearly 2,500 GCCs expected within a few years. Similarly, flex spaces, co-working and plug‑and‑play offices, have witnessed ~22% YoY growth, accounting for over 12%–15% of leasing in leading urban hubs.
Q1 Q2 Trends: A Story of Momentum
Q1 2025 kicked off strong, with nearly 16 million sq ft leased across the top seven cities, a 15% YoY increase. Demand was front‑loaded in Bengaluru and Delhi‑NCR, while Chennai doubled its activity, and flex space segments grew sharply. Q2 maintained this momentum, delivering an 11% YoY rise in overall demand and followed by consistent rent hikes in high‑demand micro‑markets.
Quality, Sustainability, and Vacancy Trends
Leasing uptake is shifting towards premium, green-certified developments. Around 80–85% of Grade A demand in 2025 is oriented to ESG-compliant office buildings, aligning with global sustainability standards. Vacancy rates have fallen to near-record lows: ~14–16% across key cities this year, down from higher levels in preceding years. Average rental rates have climbed into the ₹100–110 per sq ft/month bracket.
Expanding Office Landscape in Tier II and Emerging Micro Markets
Notable growth has also been observed in high-potential micro-markets, 15 such pockets now contribute about 65% of demand and 76% of new supply since 2020. Meanwhile, Tier II cities like Kochi and Thiruvananthapuram, tracking ~14 million sq ft combined office space, are gaining attention, albeit off a smaller base.
Corporate Expansion: Spotlight on TCS, Samsung, Morgan Stanley
Corporate real estate activity further boosts the leasing story. TCS announced a ₹4,500 crore realty investment to build new campuses across India. Samsung India is leasing over 60,000 sq ft of managed space in Chennai via WeWork. Morgan Stanley is opening a sprawling 1.2 million sq ft captive campus near Bengaluru’s Outer Ring Road, signalling strategic long‑term infrastructure bets by multinational firms.
Looking Ahead: On Track for Another Record Year
With Q1–Q2 momentum, year-to-date demand already scaling new heights, and forecasts calling for 65-70 million sq ft of leasing in 2025, India is firmly within reach of near-record net absorption. The shift to an occupier‑driven market, coupled with strong ESG trends and institutional investment, positions the commercial real estate ecosystem for healthy performance well into FY 2026. Vacancy rates are expected to tighten further, potentially hitting a decade low of ~14%.
India’s Q2 performance is more than a snapshot, it signals a structural shift in demand: diversified sectors, ESG-minded tenants, and agile workspace formats now define the narrative. As global firms deepen their footprint, domestic campuses spring up, and flexible offices flourish, India’s office market appears set not just to weather global uncertainty, but to leverage it, emerging stronger, greener, and more globally competitive than ever.
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