Is India’s Office Leasing Reaching New Heights in FY25?
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Synopsis
The office leasing landscape in India is experiencing unprecedented growth, with demand soaring amid declining vacancy rates. As sectors like GCCs and BFSI drive this trend, what does the future hold for commercial real estate in India? Discover the insights from industry experts on the evolving market dynamics.
Key Takeaways
- Record-high demand for office spaces in top cities.
- Vacancy rates decreased to 13.9%.
- Driving sectors include GCCs and BFSI.
- Net absorption reached 65 msf in FY2025.
- Projected decline in vacancy to 13-13.5% by March 2026.
New Delhi, Aug 7 (NationPress) The demand for office spaces in India's top six cities has surged to a record peak as vacancy rates dropped to 13.9 percent by March 2025, according to a recent report.
This surge is largely fueled by the leasing demands from Global Capability Centres (GCCs), banking, financial services, and insurance (BFSI) entities, as well as flex-space providers and domestic Information Technology Business Process Outsourcing (IT-BPO) companies.
The leading office markets in India include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai Metropolitan Region (MMR), and Pune. According to the rating agency ICRA, the net absorption of commercial office space in these cities is expected to remain at record-high levels heading into FY26.
The report notes, "While leasing activity from global IT firms has slowed down, there has been a significant uptick from the GCCs and BFSI sectors. We anticipate these sectors will continue to dominate leasing activity, comprising a majority of the space uptake in FY26,".
“In FY2025, net absorption reached a landmark 65 million square feet (msf) (a 14 percent year-over-year growth), surpassing the 58 msf supply. This momentum has extended into Q1 FY2026, with 17 msf of net absorption matching closely with the 17.7 msf supply,” stated Abhishek Lahoti, Assistant Vice President and Sector Head, Corporate Ratings at ICRA.
“Vacancy levels are expected to further decline to approximately 13 to 13.5 percent by March 2026, down from last year's historic low of 13.9 percent,” he added.
As of June 30, 2025, the total grade A office stock in the top six markets was around 1,030 msf, with Bengaluru leading at 26 percent, followed by Delhi NCR and the Mumbai Metropolitan Region.
MMR and Pune are also projected to experience a decline in vacancy rates, indicating strong net absorption trends and ongoing demand across vital markets.
ICRA forecasts that the credit profiles of office players will remain stable, buoyed by robust growth in net operating income (NOI) due to rising rental prices.
Point of View
The surge in office leasing highlights the resilience and adaptability of the Indian economy. As key sectors like BFSI and GCCs continue to expand, it underscores the necessity for strategic planning in urban development and infrastructure. This growth not only reflects a recovering market but also sets the stage for sustained economic advancement.
NationPress
08/10/2025
Frequently Asked Questions
What factors are driving demand for office spaces in India?
The primary factors include the leasing needs of Global Capability Centres, BFSI institutions, flex-space operators, and domestic IT-BPO firms.
What is the current vacancy rate in India's top office markets?
The current vacancy rate stands at 13.9 percent as of March 2025.
Which cities are leading in office space demand?
The top cities for office leasing in India are Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai Metropolitan Region, and Pune.
What is the projected net absorption for FY26?
The net absorption is expected to remain at record-high levels, continuing the trend from FY25.
How does the growth in office leasing affect the credit profiles of real estate players?
The growth in net operating income from higher rentals is expected to stabilize the credit profiles of office players.
