Mumbai: In its latest quarterly report, Knight Frank India noted that, despite facing global challenges, India’s office market maintained its robust momentum into the third quarter of the year. For Q3 2025 (July – September 2025), the top eight markets recorded gross leasing of 17.8 million sq ft in office transactions. Meanwhile, total gross leasing for the year-to-date (January – September 2025) reached 66.7 million sq ft, reflecting a remarkable growth of 24% compared to the same period in 2024, positioning the market strongly to exceed the previous annual record.
In the third quarter of 2025, Global Capability Centres (GCC) continued to dominate the end-user occupier segment, achieving gross leasing of 5.7 million square feet. Meanwhile, Third-party IT Services experienced a notable improvement of 38% year-over-year, with gross leasing reaching 3.2 million square feet in Q3 2025. Sustained demand, along with modest growth in new completions, contributed to a decrease in vacancy rates, which now stand at 14.5%. With new completion of 12.4 mn sq ft in Q3 2025, the office space stock crossed over 1 bn sq ft milestone.
Bengaluru leads leasing activity : Bengaluru continued its frontrunner position, recording 4.2 mn sq ft of transactions in Q3 2025. Hyderabad with 2.9 mn sq ft and Chennai with 2.8 mn sq ft followed Bengaluru. Hyderabad also stood out due to YoY growth of 33% largely driven by strong demand from GCCs.
Market Performance Snapshot – Q3 2025
|
Market |
Q3 2025 |
YoY % |
YTD September |
YTD YoY % |
|
Bengaluru |
4.2 |
-21% |
22.5 |
63% |
|
Hyderabad |
2.9 |
33% |
8.8 |
21% |
|
Chennai |
2.8 |
9% |
7.9 |
41% |
|
NCR |
2.7 |
-15% |
9.9 |
12% |
|
Pune |
2.3 |
-9% |
7.4 |
7% |
|
Mumbai |
1.9 |
-27% |
7.4 |
-12% |
|
Kolkata |
0.5 |
190% |
1.6 |
87% |
|
Ahmedabad |
0.4 |
13% |
1.2 |
-41% |
|
All India |
17.8 |
-6% |
66.7 |
24% |
Source: Knight Frank Research
Shishir Baijal, Chairman and Managing Director of Knight Frank India stated, “India’s office market has once again shown remarkable resilience, building upon the record highs achieved last year. The robust growth we’ve seen so far this year highlights the sustained confidence of both global and domestic occupiers in India’s economic fundamentals. Despite the ongoing volatility in the external environment, India’s vast talent pool and stable policy framework continue to solidify its status as a favored destination for premium office investments. With transaction activity exceeding supply, we anticipate that rent growth will remain strong in the upcoming quarters.”
Global Capability Centres anchor demand : In Q3 2025, GCCs were the largest occupier group, transacting 5.7 mn sq ft or 32% of total leasing activity. Bengaluru dominated this segment, accounting for 65% of all GCC-related transactions. Hyderabad and Chennai also saw GCCs drive demand, with a 45% and 51% share of their respective leasing activity.
|
End User |
Q3 2024 |
Q3 2025 |
% Change |
|
GCC |
7.1 |
5.7 |
-20% |
|
India Facing |
6.6 |
5.1 |
-23% |
|
Flex |
3 |
3.8 |
27% |
|
Third Party IT Services |
2.3 |
3.2 |
39% |
Source: Knight Frank Research
The resurgence of third-party IT services was another key highlight. This segment leased 3.2 mn sq ft, comprising 18% of overall transactions, a robust 38% growth from the same quarter last year. With accelerating adoption of artificial intelligence globally, India’s talent base and cost advantages continue to bolster the country’s role as a hub for IT outsourcing.
Flex space operators remained consistent contributors, leasing 3.8 mn sq ft during the quarter, representing 21% of transactions and a 27% YoY growth. India-facing businesses, however, saw their share moderate to 28% compared with 35% in Q3 2024.
Rental growth and supply dynamics : Rents across all major markets registered growth on a year-on-year basis. Kolkata led with a 14% increase, followed by Mumbai (11%), NCR (9%), Hyderabad (9%), and Bengaluru (6%). This marked the 13th consecutive quarter of stable or rising rents across India’s office markets.
During the quarter, new completions stood at 12.4 mn sq ft. Bengaluru alone delivered 5.9 mn sq ft, accounting for 48% of the total. Other markets saw relatively limited deliveries. With development activity trailing transactions, vacancy levels declined to 14.5% in Q3 2025 from 14.9% a year earlier. The total office stock in India crossed the 1 billion sq ft milestone during the quarter.
Average rent growth across markets – Q3 2025
|
Market |
YoY % |
QoQ % |
|
Kolkata |
14% |
5% |
|
Mumbai |
11% |
0% |
|
NCR |
9% |
2% |
|
Hyderabad |
9% |
1% |
|
Bengaluru |
6% |
1% |
|
Ahmedabad |
5% |
0% |
|
Pune |
4% |
1% |
|
Chennai |
1% |
1% |
Source: Knight Frank Research
Viral Desai, Senior Executive Director, Occupier Strategy & Solutions, Industrial & Logistics, Capital Markets and Retail Agency, Knight Frank India, said, “Despite ongoing geopolitical challenges, their macroeconomic impact, and the evolving work environment driven by advancements in AI and other technologies, the office market demonstrated remarkable growth in Q3 2025. Anchored by the expansion of Global Capability Centres (GCCs), all end-user categories registered growth in absorption during the year thus far. India remains a significant global office market, offering value and cost advantages to international occupiers, underscoring the sector’s resilience and strong positioning for long-term growth. While 2025 is expected to close at a new high ~ 85 mn sq ft, office leasing activity will need to be monitored closely in the coming years.”