NEW DELHI: The gross leasing activity in India’s office market reached 66.7 million sq ft in the first nine months of 2025, marking a 24% increase compared to the previous year, according to Knight Frank India, a real estate consultancy firm.
In the third quarter of 2025 (July–September), total transactions across the top eight cities amounted to 17.8 million sq ft, reflecting a 6% year-on-year decline due to prior high performance.
India achieves 1 billion sq ft office stock milestone
New completions for Q3 stood at 12.4 million sq ft, falling short of demand and resulting in a decrease in vacancy rates from 14.9% to 14.5% compared to last year. This growth brought India’s total office stock beyond the 1 billion sq ft mark for the first time, with Bengaluru contributing nearly half of this new supply at 5.9 million sq ft.
“Despite ongoing volatility in the global environment, India’s vast talent pool and stable policy framework enhance its status as a prime destination for quality office investments. With transaction activity surpassing supply, sustained rent growth is anticipated in the upcoming quarters,” stated Shishir Baijal, chairman and managing director of the firm.
Bengaluru remains a leasing frontrunner
Bengaluru led the leasing market with 4.2 million sq ft in Q3, followed by Hyderabad (2.9 million sq ft) and Chennai (2.8 million sq ft). Hyderabad saw a notable 33% year-on-year increase, spurred by Global Capability Centres (GCCs).
Year-to-date, office absorption in Bengaluru surged by 63% to 22.5 million sq ft, while Chennai experienced a 41% growth to 7.9 million sq ft. Most markets showed stable demand, supported by technology and flexible space occupiers, despite a slow sequential growth.
GCCs lead leasing growth; IT services rebound
GCCs represented the largest occupier segment in Q3 2025, making up 32% of total leasing at 5.7 million sq ft. Bengaluru accounted for 65% of GCC deals, with Hyderabad and Chennai following closely behind, where GCCs made up nearly half of all transactions.
The IT services sector witnessed a robust 38% year-on-year increase, totaling 3.2 million sq ft, driven by demand from global outsourcing and AI transformation mandates. Flexible-space operators also showed a growth rate of 27% year-on-year, with 3.8 million sq ft in transactions.
With the expansion of Global Capability Centres, all user categories observed growth in absorption thus far this year. While 2025 is projected to end at a record 85 million sq ft, office leasing activities will need to be closely monitored in the coming years, stated Viral Desai, senior executive director of the firm.
Rents increase while vacancy rates ease
Average office rents rose across all major markets for the 13th consecutive quarter, with Kolkata leading at 14% year-on-year growth, followed by Mumbai (11%), NCR (9%), and Hyderabad (9%). Vacancy rates decreased slightly to 14.5% amid sustained demand and moderate supply increases.
With Bengaluru accounting for nearly half of the Q3 completions, supply is concentrated and trailing demand, indicating continued upward pressure on rents. Knight Frank anticipates annual office leasing will close at around 85 million sq ft in 2025, exceeding previous records.
