India’s top seven cities saw a remarkable upswing in office space absorption during Q1 2025, with total leasing activity hitting 17.9 million square feet—a 34% jump compared to last year, according to a new report by real estate services firm Vestian. The surge was led by Bengaluru and Mumbai, underscoring sustained demand in the commercial real estate sector, especially from Global Capability Centres (GCCs), IT-ITeS, BFSI, and flexible workspace operators.

Bengaluru stood out as the top performer, clocking 4.08 million square feet in leasing activity—up 56% year-on-year. “Despite a quarterly decline of 3% in value terms, the share of Bengaluru in pan-India absorption increased to 23% in Q1 2025 from 19% a quarter earlier,” Vestian noted. The city also led in GCC-driven demand, accounting for 39% of absorption across this segment—a staggering 119% year-on-year growth.

Mumbai followed closely with 3.99 million square feet absorbed, while Pune recorded the highest annual percentage growth of 276%, increasing its national share from 5% to 15%. In contrast, Chennai saw a significant dip, with absorption falling by 52% year-on-year and its national share dropping to 9%.

While demand surged, new construction activity failed to keep pace. Pan-India supply additions dropped 39% quarter-on-quarter and 12% year-on-year. Vestian attributed the slowdown to the absence of new supply in Hyderabad and minimal completions in Mumbai, Chennai, and Kolkata. Despite this, Bengaluru led in new office completions with a 37% share (3.5 million sq ft), followed by Pune with a 31% share (2.9 million sq ft). NCR also saw completions double to 2.6 million sq ft compared to last year.

Hyderabad faces a vacancy challenge, holding the highest unoccupied inventory among the top seven cities at 28 million square feet. Since 2020, the city has delivered 59 million square feet of new space but absorbed only 48.5 million square feet. “Despite robust demand, the stock is expected to rise further in 2025 due to a strong pipeline of upcoming supply in the city,” the report stated.

Shrinivas Rao, FRICS, CEO of Vestian, emphasized the broader growth trend: “India’s office market maintained its growth momentum in Q1 2025, driven by sustained demand across the major office markets in India. Even though the absorption decreased over the previous quarter, GCCs, IT-ITeS, BFSI, and Flex Spaces demand for office spaces is expected to swell in the forthcoming quarters.”

This steady recovery in office space demand and a shifting preference for flexible and managed spaces indicate a vibrant future for India’s commercial real estate sector.