India’s commercial real estate market saw a strong recovery in the first half of 2025, mainly because of high demand for office spaces in Bengaluru and a steady supply of new properties. The growth was driven by Global Capability Centres and companies that offer flexible workspace solutions, showing that Bengaluru continues to be a top spot for the changing way people work after the pandemic.
India’s top seven cities saw a 40% increase in net office space leasing compared to the same period last year, totalling about 26.8 million square feet, as per ANAROCK Research. This is one of the strongest periods for the sector since 2020, showing clear signs of recovery. The growth wasn’t just about demand; average rental rates also went up by 5% in major cities, and vacancy rates dropped a little to 16.3%.
Bengaluru Leads the Charge
Bengaluru emerged as the undisputed leader, accounting for 6.55 million sq ft of India’s space absorption in H1, a 64% jump from the previous year. It also recorded the highest new supply, with 6.91 million sq ft of fresh office space in Bengaluru, underscoring continued developer confidence. The city’s average office rent climbed to around ₹88 per sq ft/month, reflecting sustained interest in Bengaluru’s occupiers despite the rising cost base.
GCCs and Flex Spaces Drive Demand
GCCs are India’s dominant occupier category, driving over half of Bengaluru’s leasing volume and nearly 40% of total activity across India’s top office markets. Flex space providers also saw significant growth, making up 22% of Bengaluru’s leasing activity. This trend is driven by hybrid work models, cost-saving benefits, and flexible solutions. Additional support came from industries like consulting, fintech, and e-commerce.
Southern Cities Dominate While Others Catch Up
Bengaluru led the way, while Pune also saw strong growth with office leasing increasing by 188% compared to the previous year. On the other hand, places like Kolkata experienced a decline in absorption. Overall, cities in the south, such as Chennai and Hyderabad, kept driving India’s commercial leasing activity because of their affordability, improving infrastructure, and the presence of a large tech workforce.
TheFlexInsights Take
At TheFlexInsights, we view this rebound not as a return to the old normal but as the emergence of a more agile, tech-driven, and hybrid-ready workspace era. Bengaluru’s dominance is not accidental; it reflects the convergence of global outsourcing demand, deep talent policy and the evolution of flex as a mainstream workspace choice. The increased share of flex leasing in a Tier 1 market like Bengaluru shows that flexibility is no longer a startup preference; it’s an enterprise priority. As developers and operators with smarter, more sustainable Grade A projects, we expect India’s space penetration in the city to climb past 25% by the end of 2026. This cycle isn’t just Bengaluru discovery, it’s about reshaping India’s office market around resilience, choice, and performance.
