NEW DELHI: The demand for commercial office space in India hit an all-time high in the first half of 2025, with gross leasing volumes reaching 48.9 million sq ft, reflecting a substantial 41% increase compared to the previous year, according to the latest report by Knight Frank.
This remarkable growth was fueled by robust leasing activities in Bengaluru, NCR, and Pune, driven predominantly by Global Capability Centres (GCCs), which accounted for 39% of the total leasing activity. Other significant players included third-party IT services (22%), flexible space operators (21%), and businesses focused on the Indian market (18%).
GCCs and IT dominate occupancy trends
The report reveals that GCCs continued their vigorous expansion, leasing 19.1 million sq ft in H1 2025, a striking 96% increase compared to H1 2024. Similarly, third-party IT services saw a 43% rise, indicating a resurgence in India’s digital and outsourcing sectors.
Supply lags behind demand
Despite the surge in demand, the supply of office spaces could not keep up. Office completions dropped by 20% year-on-year to 20.1 million sq ft, raising alarms regarding future availability. The gap between supply and demand is particularly noticeable in key markets like Bengaluru and Hyderabad, where project completions fell by 73% and 72%, respectively.
Vacancy trends and rent adjustments
Consequently, the average vacancy rate in the top eight cities decreased from 15% to 14.7%, with six out of these cities witnessing a contraction. Mumbai and Hyderabad experienced the highest year-on-year rental growth at 12% and 10%, respectively, with average rents in Mumbai reaching ₹129 per sq ft per month.
Bengaluru shines, while NCR and Pune set new records
Bengaluru maintained its lead with 18.2 million sq ft in office leasing, marking a 116% increase year-on-year. NCR followed with 7.2 million sq ft, and Pune recorded 5.1 million sq ft, both achieving their best-ever performance for H1. Kolkata also saw a significant 60% year-on-year growth.
