India Office Leasing Grows 11% in Q2 2025 - Commercial Real Estate Market Update

India's commercial real estate sector demonstrated remarkable resilience during the second quarter of 2025, with industry reports indicating that the nation's office leasing market achieved a substantial 11% year-on-year increase. Market analysts revealed that the total leased space reached 178 lakh square feet in the April-June period, compared to 161 lakh square feet recorded in the corresponding quarter of 2024.

Broad-Based Growth Across Major Metropolitan Areas

The positive momentum was observed across six of India's seven major metropolitan centers, with Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, and Pune all contributing to the overall growth trajectory. However, Mumbai's real estate market presented a contrasting picture, experiencing a decline in gross leasing volumes during the quarter.

Industry experts attributed Mumbai's underperformance to several factors, including a cautious approach adopted by Banking, Financial Services, and Insurance (BFSI) sector occupiers, a notable reduction in large-ticket transactions, constrained space availability, and elevated rental rates in the financial capital.

Market Drivers Fueling the Leasing Surge

Enhanced Business Confidence Returns

The surge in office leasing activity has been primarily driven by strengthened occupier confidence, as businesses increasingly embrace return-to-office mandates and prioritize collaborative work environments. This trend reflects a significant shift from the pandemic-era remote work policies that dominated the corporate landscape in previous years.

Sectoral Diversification Beyond Traditional IT

The leasing demand has expanded beyond the traditional Information Technology and IT-enabled Services sectors to encompass a broader range of industries, including financial services, life sciences, consulting, and engineering services. This diversification has contributed to the market's overall stability and growth momentum.

Premium Space Preferences

Companies are increasingly focusing on Grade-A office spaces that offer superior amenities, enhanced energy efficiency, and comprehensive wellness features. This preference for premium accommodations reflects the evolving workplace requirements and employee expectations in the post-pandemic era.

Market Outlook and Investment Implications

Industry forecasts suggest that if current trends continue, India's office leasing market could achieve total volumes of 65-70 million square feet by December 2025. This projection reflects the sustained momentum in the commercial real estate sector and the growing confidence among occupiers.

The market evolution toward hybrid work models has resulted in more flexible occupier requirements, with companies seeking smaller, adaptable spaces that can accommodate changing workforce dynamics. This transformation represents a gradual but significant shift in how organizations approach their real estate strategies.

The sustained leasing activity has also strengthened investor confidence in commercial assets within the Indian market, with institutional-grade properties gaining particular traction among domestic and international investment groups.

Metropolitan Performance Analysis

Regional Highlights

Bengaluru maintained its position as the leading market for office space absorption, driven primarily by technology-sector demand. Chennai witnessed significant growth, with IT companies and global capability centers contributing substantially to the leasing volumes.

Delhi-NCR demonstrated strong performance with diverse sectors showing renewed interest in office spaces, while Hyderabad's commercial real estate market recorded impressive gains as IT/ITES and telecommunications firms expanded their footprint.

Kolkata showed moderate but steady growth, indicating positive momentum building in the eastern metropolitan region. Pune's real estate market continued to demonstrate steady demand, with mid-sized firms anchoring the leasing activity.

Key Market Takeaways

India's commercial real estate market sustained its growth momentum throughout the second quarter of 2025, demonstrating remarkable resilience through diversified demand patterns and a clear preference for high-quality office spaces. While Mumbai experienced a temporary slowdown, other major metropolitan areas including Bengaluru, Chennai, Delhi-NCR, and Hyderabad propelled the overall market growth.

As occupiers continue to prioritize premium and hybrid-ready workplaces, industry analysts forecast that total leasing volumes could reach 65-70 million square feet by year-end, reflecting the sector's robust fundamentals and evolving workplace requirements.

The sustained growth in office leasing activity also indicates broader economic confidence and the continued importance of physical office spaces in India's business ecosystem, despite the ongoing evolution toward flexible work arrangements.

Disclaimer: This news article is based on industry reports and market analysis. The information provided is for informational purposes only and should not be considered as investment advice. Market conditions and leasing trends may vary based on multiple factors including economic conditions, policy changes, and local market dynamics. Readers are advised to conduct their own research and consult with qualified professionals before making any real estate or investment decisions.