India Office Market Surges: 40% Leap in Leasing and Pune's Rocketing Growth

India Office Market Surges: Leasing Growth & Pune's Rise (ARI)

India’s commercial office real estate sector has achieved exceptional growth in the first half of 2025, with net office leasing surging 40% year-on-year to 26.8 million square feet across the top 7 cities. Bengaluru maintained market leadership with 6.55 million square feet of absorption, while Pune emerged as the fastest-growing market with 188% growth. Peush Jain, MD – Commercial Leasing & Advisory, ANAROCK Group, notes that new office supply increased 25% to 24.51 million square feet, creating balanced market dynamics. Vacancy rates improved marginally to 16.3%, and average rentals grew 4% to INR 88 per square foot per month. The IT-ITES sector dominated with 29% market share, followed by co-working spaces at 22%. Market fundamentals remain healthy, supported by Global Capability Centre expansion and sustained corporate confidence, positioning the sector for continued growth through 2025.

India's Commercial Office Market Surges Ahead

The Indian commercial office real estate sector has demonstrated remarkable resilience and growth, particularly in the first half of 2025. This period saw an impressive 40% year-on-year surge in net office leasing, reaching a substantial 26.8 million square feet across the nation's top seven metropolitan areas. This significant uptick underscores a robust economic environment and a strong demand for quality office spaces, signaling a healthy market poised for further expansion. The dynamic performance is a testament to India's growing appeal as a global business hub, attracting significant investment and corporate activity.

Bengaluru Leads, Pune Accelerates Growth

Bengaluru, a perennial powerhouse in the Indian real estate landscape, once again solidified its market leadership. The city absorbed an impressive 6.55 million square feet of office space during the first half of 2025, indicating sustained demand from key industries. However, the true story of rapid expansion lies with Pune, which has emerged as the fastest-growing market. Pune witnessed an extraordinary 188% increase in office absorption, a clear indicator of its burgeoning status as a significant commercial center. This dramatic growth suggests a strategic shift in corporate location preferences, with Pune increasingly becoming a favored destination.

Factors Driving Pune's Phenomenal Rise

Pune's meteoric rise in the commercial real estate sector is attributable to a confluence of factors. A burgeoning IT and startup ecosystem, coupled with a more competitive rental market compared to established hubs like Bengaluru, has attracted significant attention. The city's improved infrastructure, availability of skilled talent, and supportive government policies have further fueled this expansion. The substantial increase in new office supply, a staggering 533% year-on-year, indicates proactive development to meet this surging demand, ensuring that the market can accommodate future growth without significant rental inflation.

Balanced Market Dynamics and Rental Stability

The significant increase in new office supply, which grew by 25% to 24.51 million square feet in the first half of 2025, has played a crucial role in maintaining balanced market dynamics. This proactive development of new spaces has helped to temper potential rental spikes, despite the robust demand. Consequently, vacancy rates have seen a marginal improvement, settling at 16.3%. This equilibrium between supply and demand has contributed to stable average rentals, which saw a modest 4% increase to approximately INR 88 per square foot per month. This stability is a positive sign for businesses seeking predictable operational costs.

The IT-ITES Sector's Enduring Dominance

The Information Technology and IT-Enabled Services (IT-ITES) sector continues to be the primary driver of office leasing in India. This sector accounted for a significant 29% of the total market share in the first half of 2025. Its consistent demand reflects the ongoing digital transformation across industries and India's pivotal role in the global tech landscape. The expansion of Global Capability Centres (GCCs) further bolsters this trend, with GCCs alone leasing substantial square footage across major cities like Bengaluru (5.45 million sq ft), NCR (2.81 million sq ft), and Pune (2.77 million sq ft), highlighting their growing footprint.

Co-working Spaces Capture Significant Share

Emerging as a strong second player, co-working spaces captured a notable 22% of the market share in office leasing. This trend highlights the increasing adoption of flexible workspace solutions by businesses of all sizes, from startups to large corporations. The agility and cost-effectiveness offered by co-working environments resonate with modern business needs, particularly in a dynamic economic climate. The BFSI (Banking, Financial Services, and Insurance) sector also demonstrated robust performance, further diversifying the demand drivers within the commercial office market.

Corporate Consolidation and Future Outlook

A significant trend observed in the first half of 2025 is the increasing preference for larger, consolidated office spaces. This is evidenced by the fact that 57% of all office deals exceeded 0.1 million square feet, an increase from 52% in the same period last year. This indicates a corporate strategy focused on consolidation, efficiency, and creating integrated workspaces. Coupled with sustained corporate confidence and the ongoing expansion of GCCs, the fundamental health of the market remains strong. These positive indicators position the Indian commercial office real estate sector for continued robust growth throughout the remainder of 2025 and beyond.

Key Takeaways from India's Office Market Boom

The first half of 2025 has painted a picture of exceptional performance for India's commercial office real estate. A 40% year-on-year leap in net absorption to 26.8 million sq ft, led by Bengaluru and a rapidly expanding Pune, highlights the sector's dynamism. Balanced market conditions, supported by a 25% increase in new supply, have kept vacancy rates at a manageable 16.3% and rentals stable at approximately INR 88/sq ft/month. The IT-ITES sector, alongside co-working spaces, continues to be a dominant force, with GCCs driving significant demand. The trend towards larger, consolidated office spaces further solidifies the positive outlook, suggesting sustained growth and a healthy market equilibrium for the foreseeable future.

Metric	H1 2025 Performance	Year-on-Year Change
Net Office Absorption	26.8 million sq ft	+40%
New Office Supply	24.51 million sq ft	+25%
Market Vacancy Rate	16.3%	Marginal Improvement (from 16.7% in H1 2024)
Average Office Rentals	INR 88/sq ft/month	+4%
Top Performing Markets (Absorption Growth)	Bengaluru (6.55 Mn sq ft), Pune (+188%)	N/A
Dominant Sectors	IT-ITES (29% share), Co-working (22% share)	N/A
GCC Leasing (Bengaluru)	5.45 million sq ft	N/A
Large Transactions (>0.1 Mn sq ft)	57% of deals	Up from 52% in H1 2024

---

From our network :

• ‌Python Data Visualization: Saving Interactive Plots with Metadata

• ‌Resolving DB2 Syntax Error: Understanding the LIMIT Clause and Alternatives

• ‌Time Series Data Analysis: Visualizing Hourly System Events with Pandas and Matplotlib

• ‌Cosmos 2553 Malfunction: Russia’s Space Weapon Ambitions Hit Snag?

• ‌The Unsung Hero of the Moon Landing: Francis Bacon and the Fuel Cell

• ‌The Role of Physics in Shaping Our Modern World

---