India’s office market maintains upward trajectory in Q1 amid strong occupier demand

New Delhi, April 23
India’s office real estate market maintained its upward trajectory in Q1, driven by robust leasing and tight new supply, pushing overall vacancy down for the seventh consecutive quarter to 15.7 per cent — a cumulatively steep drop of 275 basis points (bps) from 18.45 per cent in Q2 2023, a report showed on Wednesday.

Supply constraints and strong occupier demand in the first quarter of the year across India’s top eight office markets have resulted in a drop-in vacancy rate by 55 basis points (bps) to 15.7 per cent from 16.25 per cent in Q4 2024, according to Cushman & Wakefield’s latest Q1 2025 Office Market Report.

The total new office completions in Q1 2025 stood at 10.7 million square feet (MSF).

Bengaluru (3.28 MSF), Pune (3.21 MSF), and Delhi-NCR (2.71 MSF) contributed a combined 86 per cent (9.2 MSF) of this new supply.

Hyderabad saw a supply of 1.32 MSF, while Mumbai registered supply of 0.18 MSF. Cities like Chennai, Kolkata and Ahmedabad recorded no new supply, resulting in lower vacancy rates and higher rentals in these markets.

Meanwhile, office leasing activity remained strong in the first quarter with gross leasing volume (GLV) across the top 8 markets reaching 20.3 MSF, a 5 per cent annual increase and in line with the two-year average of 20 MSF per quarter, said the report.

Fresh leasing made up nearly 80 per cent of the activity — marking the third consecutive quarter of this trend and pointing to sustained occupier expansion.

Gross leasing volume, which factors in all leasing activity in the market, including fresh take-up, open market renewals by corporates as well as pre-leasing, is an indication of overall market activity.

“The momentum in India’s office sector has carried into Q1 2025, supported by steady closures of large deals and robust fresh leasing activity. The continued commitment of global occupiers to expand operations here signals enduring confidence in India as a strategic business destination,” said Anshul Jain, Chief Executive, India, SEA and APAC Tenant Representation.

India’s position as the global hub for tech, R&D and innovation continues to strengthen.

“The strong performance of the GCC segment — now contributing over 30 per cent of gross leasing — underscores this confidence, and we expect this trajectory to continue with more greenfield entries and expansion mandates,” said Jain.

Additionally, domestic economic factors like easing inflation and anticipated rate cuts will further support occupier activity, he added.