Nearly half of office leasing activity in the first quarter (Q1) of 2025 was driven by Delhi-NCR and Bengaluru combined. According to a report by real estate and investment firm Colliers, leasing in the top seven markets remained strong in Q1 at 15.9 million square feet, reflecting a 15% year-over-year (YoY) increase.

According to the research, Chennai also had a spectacular 93% YoY increase in leasing at 2.9 million square feet, led by space take-up by IT enterprises, while Delhi NCR saw its greatest quarterly leasing in the previous ten quarters.

The country’s top seven markets—Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune—remain resilient, as seen by this steady demand rise.

“2025 is off to a good start, as office leasing saw a respectable 15% year-over-year increase in the first quarter, reaching 15.9 million square feet. According to Arpit Mehrotra, Managing Director, Office Services, India, Colliers, corporate expansions and increased investments in commercial real estate are driving the robust adoption of Grade A space in key cities amid encouraging domestic development prospects.

He continued by saying that the expansionary plans of top companies in the Technology, Engineering & Manufacturing, and BFSI sectors are expected to drive demand momentum, which is expected to pick up speed during 2025.

He noted that the long-term demand for GCCs would continue to be high across the majority of Tier I and a few Tier II cities in the nation, helped by the policy level push in key states.

In Q1 2025, total new supply reached 9.9 million square feet, almost matching the same amount at the same time previous year.

In Q1 2025, Bengaluru and Delhi NCR together accounted for two-thirds of the additional supply. While new supply decreased annually in most areas, new completions in Delhi NCR and Pune increased by multiple times compared to Q1 2024.

In actuality, three cities—Bengaluru, Delhi NCR, and Pune—accounted for about 90% of the additional supply in Q1 2025.

In Q1 2025, average office leases rose 8% yearly as demand outpaced new supply in the majority of cities.

The study also found that, despite the lack of new supply, rental growth was stronger in a few high-activity micromarkets, including NH 48 & Golf Course Extension Road in Delhi NCR, SBD (Madhapur, HITEC City, Kondapur & Rai Durg) in Hyderabad, and BKC & Andheri East in Mumbai.

Meanwhile, vacancy rates fell by 120 basis points annually to 16.2 percent at the Indian level. According to the study, this was a sequential fall of 55 basis points.

According to the research, flex space leasing remained strong in Q1 2025, despite the need for traditional office space being driven by technology enterprises.

Conventional workplaces accounted for 86% of the 15.9 million square feet of Grade A office space that was needed in Q1 2025. Conversely, flex space leasing saw a 22% YoY increase at 2.2 million square feet.