From April to June 2025, the IT and IT-enabled services sectors took up half of all the new office spaces rented in India. At the same time, companies that offer flexible workspaces accounted for 14% of the total space taken up, showing significant growth in both areas compared to the previous quarter.
According to CRE firm Vestian, IT/ITeS firms absorbed approximately 9.4 million sq ft in Q2, up from 36% in Q1, dominating leasing across major metros including Bengaluru, Chennai, Hyderabad, and Mumbai.
Flexible workspace operators captured 14% of total leasing, accelerating their share from 9% in Q1, representing a 68% quarter-on-quarter growth in leased area.
Regional Dynamics & Tenant Focus
- About 80% of leasing activity occurred in southern hubs: Bengaluru, Hyderabad, and Chennai, reflecting the dominance of technology and GCC-led expansion in these cities.
- India’s top seven office markets collectively registered strong leasing momentum, supported by IT/ITES and flex space demand.
Broader Market Context: H1 2025 Performance
- Across H1 2025, total office leasing in the premier seven cities surged to 33.7–39 million sq ft, marking 13–18% YoY growth, per Colliers and JLL.
- Grade A leasing for Q2 rose 11% YoY to 17.8 million sq ft, with flex space accounting for 4.3 million sq ft; a robust demand signal from new‑age workspace providers.
- Technology firms remained the largest conventional space occupiers, taking up 6.4 million sq ft alone in Q2, a 42% YoY increase, dominated by GCC expansions.
Why It Matters: Flex Space & IT Driving CRE Momentum
- IT/ITeS dominance at 50% establishes these sectors as the backbone of office leasing demand.
- Flexible workspace operators gained traction rapidly, leveraging short-term leases, scalable options, and lower upfront costs,
- well-suited for GCCs and tech firms facing global uncertainties.
- Tech occupiers now account for roughly 50% of flex space demand in H1 2025, underlining the sector’s influence across workspace trends.
TheFlexInsights Take
India’s commercial real estate market is experiencing a shift towards technology companies and Gulf Cooperation Council (GCC) firms, with flexible spaces becoming a major trend. The old long-term, fixed lease model is being replaced by more flexible options focusing on scalability, location, and quick adaptation. GCC firms and IT companies are focusing on owning or building their headquarters and using flexible, managed spaces for other locations to deal with global market uncertainties. The flexible office space sector is expected to make up over 20% of total office space taken in by 2026, changing city planning and design.
