Curation Team
NEW DELHI: Gross leasing activity in India’s office market touched 66.7 million sq ft in the first nine months of 2025, up 24% year-on-year, according to Knight Frank India, a real estate consultancy firm.
During the July–September 2025 quarter (Q3 2025), office space transactions across the top eight cities stood at 17.8 million sq ft, moderating 6% year-on-year on a high base.
India crosses 1 billion sq ft office stock milestone
New completions stood at 12.4 million sq ft in Q3, lagging demand and pushing vacancy levels down to 14.5% from 14.9% a year earlier. This brought India’s total office stock past the 1 billion sq ft milestone for the first time. Bengaluru contributed nearly half of the fresh supply with 5.9 million sq ft of new space delivered.
“While the external environment remains volatile, India’s large talent pool and stable policy framework continue to reinforce its position as a preferred destination for high-quality office investments. With transaction activity outpacing supply, we expect rent growth to sustain in the coming quarters,” said Shishir Baijal, chairman and managing director of the company.
Bengaluru leads leasing activity
Bengaluru maintained its leadership, clocking 4.2 million sq ft in leasing during Q3, followed by Hyderabad (2.9 million sq ft) and Chennai (2.8 million sq ft). Hyderabad registered a 33% year-on-year rise, propelled by Global Capability Centres (GCCs).
On a year-to-date basis, Bengaluru’s office absorption rose a sharp 63% to 22.5 million sq ft, while Chennai grew 41% to 7.9 million sq ft. Despite muted sequential growth, most markets reported steady demand, supported by tech and flex-space occupiers.
GCCs drive leasing; IT services rebound
GCCs emerged as the largest occupier group in Q3 2025, accounting for 32% of total leasing at 5.7 million sq ft. Bengaluru alone contributed 65% of GCC deals, followed by Hyderabad and Chennai, where GCCs drove nearly half of all transactions.
The third-party IT services segment saw a robust 38% year-on-year rise to 3.2 million sq ft, backed by demand from global outsourcing and AI-driven transformation mandates. Flex-space operators continued their growth momentum, expanding 27% YoY with 3.8 million sq ft of transactions.
Anchored by the expansion of Global Capability Centres (GCCs), all end-user categories registered growth in absorption during the year thus far. While 2025 is expected to close at a new high 85 million sq ft, office leasing activity will need to be monitored closely in the coming years,” said Viral Desai, senior executive director of the company.
Rents rise across markets; vacancy eases
Average office rents rose across all major markets for the 13th consecutive quarter. Kolkata led with 14% year-on-year rent growth, followed by Mumbai (11%), NCR (9%), and Hyderabad (9%). Vacancy levels declined marginally to 14.5% amid sustained demand and moderate supply addition.
With Bengaluru contributing nearly half of Q3 completions, supply remains concentrated and trailing demand, indicating continued upward pressure on rentals. Knight Frank projects annual office leasing to close at around 85 million sq ft in 2025, surpassing previous records.
