New Delhi, Feb 11 : India’s office leasing market is poised for significant growth in 2025, with the top six cities expected to witness gross leasing of 65-70 million square feet, according to a report by real estate consultancy Colliers. The report highlights an optimistic future for the sector, driven by growing demand from key industries and a favorable business climate.
The report projects a 10-15 percent rise in office demand from sectors such as engineering and manufacturing, banking, financial services and insurance (BFSI), and flexible space operators.
Bengaluru: Leading the Charge
Bengaluru is expected to remain the epicenter of India’s office leasing boom, accounting for one-third of the projected demand in 2025. The city’s growth will largely be driven by expansions in Global Capability Centers (GCCs), engineering and manufacturing firms, and flex space operators, underscoring its role as a technology and innovation hub.
While Bengaluru will lead the market by a significant margin, Hyderabad and Delhi NCR are also expected to see substantial leasing activity, with each city recording 10-15 million square feet of office leasing. This would represent a 5-10 percent growth over the previous year, signaling increasing investor and occupier interest in these regions.
Meanwhile, Mumbai, Chennai, and Pune will continue to be preferred by BFSI firms, engineering and manufacturing companies, and flexible space operators. Each city is expected to see around 5-10 million square feet of demand for premium Grade A office space.
“These three cities will play a key role in the market’s overall growth, as occupiers continue to view them as strategic locations for expanding their operations,” said Arpit Mehrotra, Managing Director, Office Services at Colliers India.
Favorable Business Sentiment Driving Expansion
The report, titled ‘India Office: Setting New Standards for 2025,’ was released during the FICCI 18th Real Estate Summit. It points to sustained positive business sentiment as a key driver of growth, with the report excluding potential disruptions from external shocks or global uncertainties.
The growing demand will be fueled by a diversified mix of occupiers, the rapid expansion of GCCs, and business optimism among domestic firms. With the market gradually shifting from a supply-led environment to one where occupier needs dictate growth, developers are becoming more flexible and agile in meeting client requirements.
Approximately 60-65 million square feet of new office space supply is expected to come online in 2025, as developers increasingly tailor office spaces to align with evolving business needs. Additionally, an emphasis on sustainability and energy efficiency is reshaping how commercial properties are designed and developed.
Key Sectors Driving Demand
Three sectors are projected to account for nearly half of the total office space demand in 2025: engineering and manufacturing, BFSI, and flexible space operators. Each is expected to see a 10-15 percent annual increase in leasing activity.
Bengaluru is set to dominate leasing in the engineering and manufacturing sector, thanks to its robust industrial base and tech ecosystem. Meanwhile, Mumbai will continue to be the primary destination for BFSI firms, but cities like Bengaluru, Hyderabad, and Pune are gaining traction as alternative hubs for financial services companies.
Flexible workspace operators are also emerging as a key driver of demand, with their share of total leasing activity expected to hit 20 percent in 2025. Businesses across industries are adopting hybrid work models, increasing the need for flexible and scalable office spaces.
GCC Expansion: A Key Growth Area
Leasing by GCCs is expected to remain a key contributor to overall demand. In 2024, GCC leasing grew by 41 percent year-on-year, reaching 25.7 million square feet across the top six cities. This is projected to increase to nearly 30 million square feet in 2025, accounting for 40 percent of total office leasing.
Bengaluru and Hyderabad will continue to be the preferred hubs for knowledge-driven GCCs, driven by the availability of talent and innovation ecosystems. US-based companies are expected to lead this expansion, contributing nearly 70 percent of the total GCC leasing demand. Technology, BFSI, and engineering and manufacturing firms will remain the primary players driving this growth.
Sustainability and REITs Reshaping Commercial Real Estate
As the demand for high-quality office spaces grows, Real Estate Investment Trusts (REITs) are gaining momentum, fueled by rising retail investor participation and supportive regulatory policies. Developers are curating portfolios that prioritize green, sustainable spaces, aligning with both market demand and national goals for carbon reduction.
With occupiers increasingly favoring environmentally friendly buildings, developers are integrating sustainable features such as energy-efficient designs and low-carbon construction materials. This shift will not only accelerate India’s efforts to meet its net-zero targets but also redefine the future of commercial real estate development in the country.
As India’s office market transitions into a new growth phase, the combination of demand from key sectors, developer agility, and a push for sustainability is expected to cement the country’s position as a global hub for business and innovation. With cities like Bengaluru, Hyderabad, and Delhi NCR leading the way, India’s commercial real estate landscape in 2025 is set to thrive on collaboration, technology, and a commitment to a greener future.( With inputs from IANS)