Bengaluru achieved a record 24.1 million sq ft of office leasing in 2025, led by tech firms, GCC expansions, and flexible workspace operators. Despite 12 million sq ft of new supply, vacancy fell to 10.5%. Rents rose 6.6%, and capital values climbed 8.6%, reflecting strong occupier and investor confidence.
Bengaluru has delivered its strongest performance yet in the commercial real estate sector. Office leasing reached an all-time high of 24.1 million square feet in 2025, reinforcing the city’s position as India’s leading technology and innovation hub. The surge was driven by large corporate expansions, Global Capability Centre (GCC) growth, and rising demand from flexible workspace operators.
The final quarter alone accounted for 9.3 million square feet of gross leasing, marking an 18.6% year-on-year increase. Activity was heavily concentrated in the Southern Business District, especially along the Outer Ring Road (ORR) South-East corridor. This micro-market continues to attract multinational occupiers due to strong Grade A supply and improving metro connectivity.
Diversified Demand and Large Deals
The technology sector remained the largest contributor, accounting for nearly a quarter of annual leasing volumes. However, demand has become more diversified. Flexible workspace operators and manufacturing-linked occupiers followed closely, reflecting Bengaluru’s evolution beyond pure IT services.
Large transactions above 100,000 square feet dominated leasing activity, signalling long-term strategic commitments rather than short-term expansions. Pre-commitments in under-construction projects further highlighted occupier confidence in the city’s growth story. Analysts attribute much of the momentum to GCC expansions, engineering and R&D investments, and Bengaluru’s growing role as a back-office and innovation hub for multinational corporations.
Strong Absorption Despite New Supply
The record leasing came alongside a significant supply pipeline. Around 12 million square feet of new office stock was delivered in 2025, including 3.5 million square feet in the final quarter. More than half of the recent completions were in the ORR South-East corridor, strengthening its dominance as a preferred business district.
Despite this influx of new space, vacancy rates declined to 10.5%, down 70 basis points quarter-on-quarter. Healthy absorption levels helped offset new deliveries, demonstrating strong occupier appetite for high-quality office assets.
Rental values also firmed up. Average office rents rose 6.6% year-on-year, supported by limited availability in prime submarkets. Capital values increased 8.6%, reflecting sustained investor interest in stabilised, ESG-compliant properties with strong tenant covenants. Developers are increasingly integrating energy-efficient systems, enhanced air-quality standards, and digital building management tools, features now seen as essential in premium office developments.
Outlook: Growth with Infrastructure Focus
Market observers expect leasing momentum to continue into 2026, with healthcare, BFSI, engineering services, and managed workspace operators joining technology firms as key occupiers. However, sustained growth will depend on parallel investments in mobility, housing, and civic infrastructure.
The clustering of demand along established corridors highlights the need for metro expansion, last-mile connectivity, and mixed-use planning to prevent congestion-led constraints. With tightening vacancy in prime areas and institutional capital targeting income-generating assets, Bengaluru appears well positioned to remain India’s most active commercial office market in the coming year.
