India’s office real estate market opened 2025 on a high note, registering its seventh straight quarter of vacancy decline, according to Cushman & Wakefield’s Q1 2025 Office Market Report. Driven by steady demand and limited new completions, vacancy rates across the top 8 cities decreased to 15.7%, a 55-basis-point (bps) decline from the previous quarter and a sharp 275-bps decrease from Q2 2023. This marks the lowest vacancy level in four years.

“The momentum in India’s office sector has carried into Q1 2025,” said Anshul Jain, Chief Executive for India, SEA & APAC Tenant Representation. “Robust fresh leasing activity and continued commitment of global occupiers signal enduring confidence in India as a strategic business destination.”

Leasing activity remained strong, clocking 20.3 million sq. ft. in gross leasing volume (GLV), a 5% year-on-year rise. Notably, new leasing accounted for nearly 80% of transactions—a sign of sustained expansion rather than renewals. Bengaluru (4.86 MSF) and Mumbai (4.31 MSF) led the charts, followed by Pune (3.49 MSF) and Delhi-NCR (2.75 MSF).

Pre-commitments more than doubled quarter-on-quarter, reflecting rising occupier confidence. Net absorption, a key metric for actual office space occupancy, reached 13.4 million square feet (MSF), marking the third-highest quarter on record. Cities like Delhi-NCR, Mumbai, and Bengaluru accounted for 63% of this total combined.

New office completions, however, fell short. With only 10.7 MSF of supply added in Q1 2025—a drop of 13% year-on-year—markets faced growing supply constraints. Cities like Chennai, Kolkata, and Ahmedabad reported no new stock, contributing to tighter vacancy rates and upward pressure on rents. Mumbai posted a 10% QoQ rent increase, the sharpest among the top cities.

“GCCs remained the primary driver of this momentum, accounting for over 31% of total leasing activity,” added Veera Babu, Executive Managing Director, Tenant Representation. “With over 40 MSF of active demand in the pipeline and a shortage of prime, high-quality space, competition will intensify across major markets.”

Sector-wise, IT-BPM continued to dominate at 29% of GLV, while GCCs grew their footprint to 31% from 28% in 2024. BFSI and flex space providers accounted for 22% and 13%, respectively, with Bengaluru, Pune, and Hyderabad emerging as hotspots for GCC expansion.

Despite global economic headwinds, India’s office market remains resilient. Easing inflation, expected rate cuts, and increasing adoption of flexible space will further boost occupier activity in the coming quarters.

As demand outpaces supply, particularly for high-quality office space in central locations, the pressure is likely to intensify, making early commitments and pre-leases a strategic necessity for occupiers targeting India’s top business hubs.