NewsStocksIndia's Office Real Estate Booms: 6% Rental Surge and Record-Breaking Leasing ActivityIndia's Office Real Estate Booms: 6% Rental Surge and Record-Breaking Leasing Activity
India's commercial office real estate sector has shown significant growth across key metrics. Average office rentals in top seven cities increased by 6%, reaching ₹90/sq. ft. in 9M 2025. Net office absorption surged 34% to 42 million sq. ft., exceeding pre-pandemic levels by 30%. Vacancy rates decreased from 16.70% to 16.20%. Global Capability Centres drove over 40% of leasing activity. New completions rose 15% to 39.21 million sq. ft. Key sectors dominating demand were IT/ITeS (27%), Coworking (23%), and BFSI (18%). Bengaluru led in absolute absorption, while Pune showed highest growth in new completions.
*this image is generated using AI for illustrative purposes only.
India's commercial office real estate sector has demonstrated remarkable resilience and growth, according to recent market data. The sector has shown significant improvements across key metrics, including rental rates, absorption, and new completions.
Rental Growth and Absorption
The average office rentals across India's top seven cities have seen a substantial increase:
| Metric | 9M 2024 | 9M 2025 | YoY Change |
|---|---|---|---|
| Average Rental (₹/sq. ft.) | 85.00 | 90.00 | 6.00% |
Bengaluru led the rental growth with an impressive 9% year-on-year increase, outperforming the national average.
Net office absorption has surged to record levels:
| Metric | YoY Change | Volume |
|---|---|---|
| Net Absorption | 34% | 42.00 million sq. ft. |
This figure not only represents a significant year-on-year growth but also exceeds pre-pandemic levels by 30%. Pune recorded the highest absorption growth at 97%, while Bengaluru led in absolute terms with 9.95 million sq. ft. leased.
Vacancy Rates and Leasing Activity
The overall market health is reflected in declining vacancy rates:
| Metric | 9M 2024 | 9M 2025 |
|---|---|---|
| Vacancy Rate | 16.70% | 16.20% |
Chennai stood out with the lowest vacancy rate at 8.9%, indicating strong demand in the southern market.
Global Capability Centres (GCCs) have been a major driver of leasing activity:
| Sector | Leasing Share | Volume |
|---|---|---|
| GCCs | Over 40% | 23.34 million sq. ft. |
New Completions and Sector-wise Demand
The market has also seen a significant increase in new office space:
| Metric | YoY Change | Volume |
|---|---|---|
| New Completions | 15% | 39.21 million sq. ft. |
Pune led this growth with an astounding 168% increase in new completions.
The demand for office space was dominated by key sectors:
| Sector | Leasing Share |
|---|---|
| IT/ITeS | 27% |
| Coworking | 23% |
| BFSI | 18% |
This distribution highlights the continued importance of technology and flexible workspace solutions in driving office demand.
Market Outlook
The robust performance across various metrics paints a positive picture for India's commercial office real estate sector. The significant growth in rentals, record-breaking absorption levels, and strong demand from diverse sectors indicate a healthy and expanding market. As businesses continue to adapt to evolving work models, the demand for quality office spaces, particularly from IT/ITeS, coworking, and BFSI sectors, is likely to remain strong.
The decline in vacancy rates, coupled with increased new completions, suggests a well-balanced market that is effectively meeting the growing demand while maintaining healthy occupancy levels. This balance is crucial for sustaining the sector's growth and attracting further investments.
As the market continues to evolve, stakeholders should keep a close eye on emerging trends, particularly the strong performance of GCCs and the rising prominence of cities like Pune and Bengaluru in driving market growth.
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