Indian office space markets overcome tariffs, geopolitical tensions, surges ahead
Times of India | 28 October 2025Office absorption continued to soar by 34% from approximately 31.31 million sq ft in the first nine months of 2024 to around 42 million sq ft in the corresponding period of 2025. In 2019 when office demand was high, the net absorption in the first nine months stood around 32.26 million sq ft in the top 7 cities, indicating a 30% growth in 2025.
Average monthly rentals of office space in the top cities increasing by 6% from Rs 85 per sq ft in the first nine months of 2024 to Rs 90 per sq ft in the corresponding period of 2025.
This growth is led by Bengaluru, which saw the highest jump of 9% in office rents. Despite the increase in new office completions, vacancy rates have slightly decreased, indicating a robust demand for office spaces.
Chennai stands out with the lowest office vacancy rate at 8.9%, while the overall vacancy across the top 7 cities has dipped from 16.7% to 16.2%. This trend is supported by a significant rise in net office absorption, which peaked at approximately 42 million sq ft in Jan-Sept 2025, marking a 34% increase from the previous year and a 30% rise compared to the same period in 2019.
Pune has emerged as a key player, witnessing a staggering 97% increase in net office absorption and a 168% growth in new office completions. This city, along with Bengaluru and Delhi-NCR, is driving the demand for high-quality Grade A office spaces equipped with modern amenities and sustainability features.
The IT/ITeS sector remains the largest contributor to office space absorption, accounting for 27% of the total, followed by coworking spaces at 23% and BFSI at 18%.
The demand for flexible workspaces continues to grow, reflecting the shift towards hybrid work models post-pandemic.
“Multiple factors are driving office space demand in the country despite all headwinds. GCCs are a major driver of office space leasing in the top 7 cities,” says Anuj Puri, chairman of Anarock Group. “For instance, out of the total gross office leasing of 58.28 million sq ft in Jan-Sept 2025, over 40% or approximately 23.34 million sq ft was leased by the GCCs alone.
Bengaluru saw the highest gross leasing of 8.3 million sq ft by GCCs, followed by Pune with 3.73 million sq ft and Chennai with 3.57 million sq ft."
He further pointed out that several companies were looking for high-quality grade A office spaces with better infrastructure and amenities, and green-certified sustainability features. This has also increased the demand for new office spaces equipped with these amenities and features. Supply is following this growing demand. Also, India’s economy and demography continue to grow, giving both domestic and multi-national businesses headroom to expand their operations.
