Are IT Sectors Leading Office Space Leasing in India?
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Synopsis
The IT sectors in India are experiencing unprecedented growth in office space leasing, accounting for 50% of the market in Q2 2025. With the rise of flex spaces and major cities driving this trend, the landscape of commercial real estate is evolving rapidly. What does this mean for the future of workspaces?
Key Takeaways
- IT sectors dominate commercial real estate leasing with 50% absorption in Q2 2025.
- Flex spaces have seen a 68% growth in absorption.
- Major cities like Bengaluru, Hyderabad, and Mumbai account for 80% of leasing activity.
- The top seven cities recorded a 21% YoY increase in absorption.
- Anticipated absorption for 2025 could reach 75 million sq ft.
New Delhi, July 25 (NationPress) The Information Technology-enabled Services (ITeS) and IT sectors in India are firmly establishing their dominance in the commercial real estate (CRE) leasing market, representing 50 percent of total absorption during the April-June period (Q2 2025), a notable rise from 36 percent in the previous quarter, according to a report released on Friday.
Flex spaces followed, making up 14 percent of the overall absorption, which is an increase from 9 percent in the last quarter. The space utilized by flex offices saw a striking 68 percent rise compared to the preceding quarter. Major southern cities like Bengaluru, Chennai, and Hyderabad collectively accounted for 80 percent of absorption in metropolitan areas, as indicated by the CRE firm Vestian.
Even with the increase in flex spaces, the IT-ITeS sector remains a powerhouse in this area, absorbing 9.4 million square feet in Q2 2025. A significant portion of this leasing activity was centered around the neighborhoods of Bengaluru’s Yeshwantpur, Hyderabad’s Nanakramaguda, and Mumbai’s Airoli.
The leading seven cities recorded 36.75 million sq ft of absorption from the IT-ITeS sector in the first half of 2025, marking a 21 percent increase compared to the same timeframe last year (YoY). The BFSI sector closely follows with six percent of total absorption, down from 20 percent in the previous quarter.
“Given this growth trajectory, we predict absorption could exceed 75 million sq ft by the end of 2025, potentially achieving the highest absorption recorded in a calendar year,” the report stated.
“India’s office market has shown remarkable growth in Q2 2025, primarily fueled by robust absorption in key cities like Bengaluru, Hyderabad, and Mumbai. As more companies return to in-office work and several grade-A office projects are set to complete in the latter half of 2025, we expect this growth momentum to persist with an uptick in office utilization,” commented Shrinivas Rao, CEO of Vestian.
Flex spaces are a unique category of commercial real estate that offers shorter lease terms (typically ranging from 7 months to a few years), combining office, industrial, and occasionally warehousing functions within a single property.
“Businesses choosing flex spaces enjoy flexible and customizable work environments. The appeal of flex spaces lies in their short-term leases, enabling companies to swiftly scale their operations and minimize initial capital expenditures,” the report noted.
Point of View
I see this growth in office leasing as a pivotal moment for the Indian economy. The dominance of the IT sector signals robust recovery and adaptation in the commercial real estate market. This trend not only reflects changing work patterns but also highlights the resilience of Indian businesses as they adapt to new demands. We at NationPress remain committed to delivering insightful analysis on these developments.
NationPress
26/07/2025
Frequently Asked Questions
What percentage of office spaces do IT sectors occupy in India?
IT sectors occupy 50% of the office spaces in India as of Q2 2025.
What are flex spaces?
Flex spaces are commercial real estate that offer shorter lease terms and combine various functions like office and industrial within the same property.
Which cities are leading in office space absorption?
Bengaluru, Hyderabad, and Mumbai are the leading cities in office space absorption.
How much did flex space absorption increase?
Flex space absorption increased from 9% to 14% in the last quarter.
What is the projected absorption for 2025?
The projected absorption for 2025 is expected to exceed 75 million sq ft.
