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Strong start to 2025: Office leasing in Q1 rises 15% YoY to 15.9 million square feet across top 7 cities
Strong start to 2025: Office leasing in Q1 rises 15% YoY to 15.9 million square feet across top 7 cities

April 9, 2025

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Bengaluru and Delhi NCR together drove about half of the total leasing and 2/3rd of the new supply during Q1 2025. Chennai’s office space demand almost doubled at 2.9 million square feet in Q1 2025, led by select large deals by Technology firms.


Bengaluru, 27 March 2025: 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 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% 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. 

Rentals surged 8% annually amidst steady new supply and robust demand

 

Overall new supply touched 9.9 million square feet during Q1 2025, almost at par with the same period last year. Bengaluru and Delhi NCR together drove two-third of the new supply during Q1 2025. While 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. In fact, almost 90% of the new supply during Q1 2025 was concentrated in three cities – Bengaluru, Delhi NCR and Pune.

 

With demand outpacing new supply across most cities, average office rentals increased annually by 8% 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%. This was a 55 basis points decline on a sequential basis. 

Technology firms drove conventional office space demand, Flex space leasing remained buoyant 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. 

 

Technology sector continued to drive office space demand, leasing 4.4 million square feet of conventional office space during Q1 2025, 28% of the total demand during the quarter. BFSI and Engineering & Manufacturing demand was also healthy at 3.4 million square feet and 2.4 million square feet, together accounting for 36% of the total space uptake in the quarter. 


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Colliers India
Sukanya Dasgupta, Head Marketing and Communications - sukanya.dasgupta@colliers.com

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