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Delhi NCR and Bengaluru together drove nearly half of the office leasing activity during the first quarter (Q1) of 2025, with leasing across the top seven markets remained strong in Q1 at 15.9 million sqare feet, reflecting a 15 per cent year-on-year (YoY) increase, according to a report by real estate and investment firm Colliers.
While Delhi NCR saw its highest quarterly leasing in the last 10 quarters, Chennai too witnessed a remarkable 93 per cent YoY surge at 2.9 million square feet, driven by space take-up by technology firms, the report noted. This sustained demand growth underscores the continued resilience of the country's top seven markets, namely Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune. "2025 has started on a positive note, with office leasing witnessing a commendable 15 per cent year-on-year growth at 15.9 million square feet in the first quarter. Key markets are seeing strong Grade A space uptake, driven by corporate expansions, rising investments in commercial real estate, amidst promising domestic growth prospects, said Arpit Mehrotra, Managing Director, Office Services, India, Colliers. He added that demand momentum is likely to gain pace throughout 2025, fueled by expansionary plans of leading firms across Technology, Engineering & Manufacturing and BFSI sectors. Additionally, aided by the policy level push in major states, long-term demand for GCCs will continue to remain strong in most Tier I and select Tier II cities of the country, he added. Overall new supply touched 9.9 million square feet during Q1 2025, almost at par with the same period last year. Both Bengaluru and Delhi NCR together drove two-third of the new supply during Q1 2025. While majority of the markets saw a decline in new supply on an annual basis, Delhi NCR and Pune witnessed multifold growth in new completions, as compared to Q1 2024. In fact, almost 90 per cent of the new supply during Q1 2025 was concentrated in three cities - Bengaluru, Delhi NCR and Pune. With demand outpacing new supply across most cities, average office rentals increased annually by 8 per cent during Q1 2025. Amidst limited new supply, growth in rentals was higher in select high activity micro markets such as BKC & Andheri East in Mumbai, SBD (Madhapur, HITEC City, Kondapur & Rai Durg) in Hyderabad and NH 48 & Golf Course Extension Road in Delhi NCR, the report added. At the India level, vacancy levels meanwhile dropped by 120 basis points on an annual basis to 16.2 per cent. This was a 55 basis points decline on a sequential basis, as per the report. Technology firms drove conventional office space demand, Flex space leasing remained buoyant in Q1 2025, the report noted. Of the 15.9 million square feet of Grade A office space demand in Q1 2025, 86 per cent came from conventional workspaces. Flex space leasing, meanwhile, at 2.2 million square feet witnessed a 22 per cent YoY growth. The report's data suggests that the technology sector continued to drive office space demand, leasing 4.4 million square feet of conventional office space during Q1 2025, 28 per cent of the total demand during the quarter. BFSI and Engineering & Manufacturing demand was also healthy at 3.4 million square feet and 2.4 million square feet, together accounting for 36 per cent of the total conventional space uptake in the quarter. (ANI)
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