· Bengaluru and Delhi NCR together drove about half of the total leasing and 2/3rd of the new supply during Q1 2025
· Chennai’s office space demand almost doubled at 2.9 million square feet in Q1 2025, led by select large deals by Technology firms
· Conventional leasing accounted for 86% of the Grade A office space demand in Q1 2025, remaining 14% space uptake came from flex spaces
· New supply during Q1 2025 remained steady at 9.9 million square feet, almost 90% of completions in Bengaluru, Delhi NCR and Pune
· Amidst continued demand momentum, vacancy levels declined 120 basis points on an annual basis
New Delhi, 27 March 2025: Office leasing across the top seven markets remained strong in Q1 2025 at 15.9 million sq ft, reflecting a 15% year-on-year (YoY) increase. Ongoing demand momentum has added credibility to the prevailing optimism in the office market of the country. Bengaluru and Delhi NCR together drove nearly half of the leasing activity during the quarter. While Delhi NCR saw its highest quarterly leasing in the last 10 quarters, Chennai too witnessed a remarkable 93% YoY surge at 2.9 million square feet, driven by space take-up by technology firms. 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% 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. We anticipate the demand momentum 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”, says Arpit Mehrotra, Managing Director, Office Services, India, Colliers.
Trends in Grade A gross absorption (in million square feet)
City | Q1 2024 | Q1 2025 | YoY change (%) |
Bengaluru | 4.0 | 4.5 | 13% |
Chennai | 1.5 | 2.9 | 93% |
Delhi-NCR | 2.5 | 3.3 | 32% |
Hyderabad | 2.9 | 1.7 | -41% |
Kolkata | 0.2 | 0.1 | -50% |
Mumbai | 1.9 | 2.2 | 16% |
Pune | 0.8 | 1.2 | 50% |
Pan India | 13.8 | 15.9 | 15% |
Source: Colliers
Gross absorption does not include lease renewals, pre-commitments and deals where only a letter of Intent has been signed.
Top 7 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai, and Pune
Rentals surged 8% annually amidst steady new supply and robust demand
Overall new supply touched 9.9 million square feet during Q1 2025, almost at par with the same period last year. 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% of the new supply during Q1 2025 was concentrated in three cities – Bengaluru, Delhi NCR and Pune.
Trends in Grade A new supply (in million square feet)
City | Q1 2024 | Q1 2025 | YoY change (%) |
Bengaluru | 4.4 | 3.7 | -16% |
Chennai | 0.3 | 0.2 | -33% |
Delhi-NCR | 0.5 | 2.7 | 440% |
Hyderabad | 2.6 | 0.3 | -88% |
Kolkata | 0.2 | 0.1 | -50% |
Mumbai | 1.0 | 0.4 | -60% |
Pune | 1.0 | 2.5 | 150% |
Pan India | 10.0 | 9.9 | -1% |
Source: Colliers
Top 7 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai, and Pune
With demand outpacing new supply across most cities, average office rentals increased annually by 8% 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. At the India level, vacancy levels meanwhile dropped by 120 basis points on an annual basis to 16.2%. This was a 55 basis points decline on a sequential basis.
Technology firms drove conventional office space demand, Flex space leasing remained buoyant in Q1 2025
Of the 15.9 million square feet of Grade A office space demand in Q1 2025, 86% came from conventional workspaces. Flex space leasing, meanwhile, at 2.2 million square feet witnessed a 22% YoY growth.
Trends in conventional and flex space leasing (in million square feet)
Q1 2024 (Share in %) | Q1 2025 (Share in %) | YoY change (%) | |
Conventional leasing (msf) | 12.0 (87%) | 13.7 (86%) | 14% |
Flex space leasing (msf) | 1.8 (13%) | 2.2 (14%) | 22% |
Total | 13.8 | 15.9 | 15% |
Source: Colliers
Data pertains to top 7 cities - Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai, and Pune
Technology sector continued to drive office space demand, leasing 4.4 million square feet of conventional office space during Q1 2025, 28% 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% of the total conventional space uptake in the quarter.
“Q1 2025 saw 2.2 million square feet of flex space leasing across the top 7 cities of the country, a 22% YoY increase. Leasing by flex space operators was particularly strong in Delhi NCR, Pune, and Bengaluru with these three cities together accounting for almost 80% of the total flex space uptake in the quarter. Fully managed office spaces driven by enterprise-level offerings, plug & play facilities and a high degree of customisable solutions are expected to drive flex space momentum throughout 2025. Consequently, flex spaces are likely to gain further prominence, and their share in occupiers’ portfolio can potentially reach 12-15% in the coming years”, said Vimal Nadar, Senior Director and Head of Research, Colliers India.
No comments:
Post a Comment