Office Leasing in Q1 Rises 15% YoY to 15.9 mn Sq Ft

28 Mar 2025 CW Team

“2025 has started on a positive note, with office leasing witnessing a commendable 15 per cent year-on-year growth at 15.9 million square feet in the first quarter. Key markets are seeing strong Grade A space uptake, driven by corporate expansions, rising investments in commercial real estate, amidst promising domestic growth prospects. We anticipate the demand momentum to gain pace throughout 2025, fueled by expansionary plans of leading firms across Technology, Engineering & Manufacturing and BFSI sectors. Additionally, aided by the policy level push in major states, long-term demand for GCCs will continue to remain strong in most Tier I and select Tier II cities of the country”, says Arpit Mehrotra, Managing Director, Office Services, India, Colliers.

With demand outpacing new supply across most cities, average office rentals increased annually by 8 per cent during Q1 2025. Amidst limited new supply, growth in rentals was higher in select high activity micro markets such as BKC & Andheri East in Mumbai, SBD (Madhapur, HITEC City, Kondapur & Rai Durg) in Hyderabad and NH 48 & Golf Course Extension Road in Delhi NCR. At the India level, vacancy levels meanwhile dropped by 120 basis points on an annual basis to 16.2 per cent. This was a 55 basis points decline on a sequential basis. Of the 15.9 million square feet of Grade A office space demand in Q1 2025, 86 per cent came from conventional workspaces. Flex space leasing, meanwhile, at 2.2 million square feet witnessed a 22 per cent YoY growth.

Office leasing across the top seven markets remained strong in Q1 2025 at 15.9 million sq ft, reflecting a 15 per cent year-on-year (YoY) increase. Ongoing demand momentum has added credibility to the prevailing optimism in the office market of the country. Bengaluru and Delhi NCR together drove nearly half of the leasing activity during the quarter. While Delhi NCR saw its highest quarterly leasing in the last 10 quarters, Chennai too witnessed a remarkable 93 per cent 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, namely Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune. “2025 has started on a positive note, with office leasing witnessing a commendable 15 per cent year-on-year growth at 15.9 million square feet in the first quarter. Key markets are seeing strong Grade A space uptake, driven by corporate expansions, rising investments in commercial real estate, amidst promising domestic growth prospects. We anticipate the demand momentum to gain pace throughout 2025, fueled by expansionary plans of leading firms across Technology, Engineering & Manufacturing and BFSI sectors. Additionally, aided by the policy level push in major states, long-term demand for GCCs will continue to remain strong in most Tier I and select Tier II cities of the country”, says Arpit Mehrotra, Managing Director, Office Services, India, Colliers. With demand outpacing new supply across most cities, average office rentals increased annually by 8 per cent during Q1 2025. Amidst limited new supply, growth in rentals was higher in select high activity micro markets such as BKC & Andheri East in Mumbai, SBD (Madhapur, HITEC City, Kondapur & Rai Durg) in Hyderabad and NH 48 & Golf Course Extension Road in Delhi NCR. At the India level, vacancy levels meanwhile dropped by 120 basis points on an annual basis to 16.2 per cent. This was a 55 basis points decline on a sequential basis. Of the 15.9 million square feet of Grade A office space demand in Q1 2025, 86 per cent came from conventional workspaces. Flex space leasing, meanwhile, at 2.2 million square feet witnessed a 22 per cent YoY growth.

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