By Kailash Babar
iStockIndia office property market (Image for representation)
India鈥檚 commercial real estate sector surged ahead in the first half of 2025, driven by occupier confidence, strategic expansions, and a sustained preference for high-quality office spaces.With large enterprises securing future-ready workspaces and the flex segment gaining traction, the country鈥檚 office market has cemented its position as a preferred destination for global and domestic occupiers alike.Total office space leasing across the top eight cities touched a record 48.9 million sq ft during January-June 2025, the highest ever half-yearly volume recorded in the country, showed a Knight Frank India assessment.This represents a 41% year-on-year increase over H1 2024 led by Global Capability Centres (GCCs), which made up 39% of all transactions, accounting for 19.1 million sq ft.鈥淭his performance is a testament to India鈥檚 resilient economic fundamentals and its growing prominence as a global business hub. The sustained demand for high quality office spaces owing to occupiers鈥 confidence, has propelled transaction volumes to historic highs. As we move forward, India鈥檚 strategic appeal and innovative spirit will continue to position it as a global leader in the office market,鈥 said Shishir Baijal, CMD, Knight Frank India.Live EventsBengaluru emerged as the top-performing market, with its office absorption hitting a historic high of 18.2 million sq ft, or 37% of total India volumes. The city鈥檚 demand was heavily influenced by GCCs, contributing 55% of the leasing activity, and 46% of the space transacted came through pre-commitments, indicating a lack of ready-to-move inventory.鈥淚ndia鈥檚 office market has not only sustained the breakout momentum of 2024 but accelerated beyond it in H1 2025. Despite global disruptions, India stands out as a resilient, pro-business destination for capital. With the continued expansion of GCCs and a resurgence in Third Party IT Services, the office market is benefiting from strong structural tailwinds,鈥 said Viral Desai, Senior ED, Occupier Strategy & Solutions, Industrial & Logistics, Capital Markets and Retail Agency, Knight Frank India.According to him, barring limited supply-side constraints, the market remains firmly on track for sustained growth through the rest of the year.Key markets including NCR, Pune, and Kolkata also registered record half-yearly volumes, with Kolkata crossing 1 million sq ft for the first time ever. Mumbai and Ahmedabad witnessed a decline in activity, attributed primarily to a high base in the prior period rather than a slowdown.Even as demand remained strong, new completions stood at 20.1 million sq ft, a 20% on-year decline, pointing to a lag in supply additions. Consequently, the vacancy rate fell to 14.7%, further tightening availability in prime micro-markets.Rental values firmed up across all eight cities. Mumbai led the growth with a 12% year-on-year increase, followed by 8% in NCR and 7% in Bengaluru. This rental push was driven by limited supply in core locations and continued demand from large occupiers.Apart from GCCs, third-party IT service providers saw a sharp uptick in activity, leasing 10.9 million sq ft, or 22% of total volume. Flex space operators recorded their highest ever leasing at 10.2 million sq ft, up 43% YoY, with co-working formats alone contributing 76% of this segment鈥檚 take-up.(You can now subscribe to our Economic Times WhatsApp channel)
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