Delhi NCR and Bengaluru Surge Ahead in Office Leasing, Driving 15% Year-Over-Year Growth: Colliers Report
New Delhi [India], March 29 (ANI): In the first quarter (Q1) of 2025, leasing activities were significantly driven by Delhi NCR and Bengaluru, accounting for almost half of all office leases. The total leased area across the top seven markets was robust at 15.9 million square feet, marking a 15 percent rise compared to the same period last year, as stated in a report from a real estate and investment company. Colliers .
Despite witnessing its peak quarterly leasing activity over the past 10 quarters, Delhi NCR was matched by Chennai which experienced an impressive 93 percent year-over-year increase totaling 2.9 million square feet, largely due to tech companies occupying more spaces, as highlighted in the report.
This ongoing increase in demand highlights the persistent strength of the nation's leading seven markets, which include Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune.
"2025 began optimistically as office leasing experienced an impressive 15 percent increase compared to the previous year, totaling 15.9 million square feet in the initial three months. Major markets have shown robust demand for high-quality spaces, fueled by company enlargements and increased investment in commercial property, thanks to favorable economic conditions domestically," stated Arpit Mehrotra, Managing Director of Office Services in India. Colliers .
He mentioned that the demand momentum is expected to accelerate throughout 2025, driven by growth initiatives from major companies in the technology, engineering and manufacturing, as well as BFSI sectors.
Moreover, thanks to the policy-level support in key regions, the long-term demand for GCCs is expected to stay robust in most Tier I cities as well as some selected Tier II cities across the nation, he noted.
Total new supply reached 9.9 million square feet in Q1 of 2025, nearly matching the figures from the corresponding quarter the previous year.
Collectively, Bengaluru and Delhi NCR accounted for two-thirds of the new supply in Q1 2025. Despite most markets experiencing a drop in new supply year-over-year, both Delhi NCR and Pune reported substantial increases in completed projects compared to Q1 2024.
Actually, nearly 90 percent of the fresh supply in the first quarter of 2025 was focused in three cities: Bengaluru, Delhi NCR, and Pune.
With demand outpacing new supply across most cities, average office rentals increased annually by 8 per cent during Q1 2025.
Despite minimal fresh supply, certain high-activity micro-markets experienced more significant rental growth. These areas include BKC and Andheri East in Mumbai, SBD (comprising Madhapur, HITEC City, Kondapur, and Rai Durg) in Hyderabad, along with NH 48 and Golf Course Extension Road in Delhi NCR, according to the report.
At the Indian level, the vacancy rates decreased by 120 basis points year-over-year to reach 16.2 percent. This represents a 55 basis point drop compared to the previous quarter, according to the report.
Tech companies fueled the demand for traditional office spaces, while flexible workspace rentals stayed strong in Q1 2025, according to the report.
In the first quarter of 2025, out of the total 15.9 million square feet demand for Class A office spaces, approximately 86 percent originated from traditional offices. On the other hand, flex space rentals saw an uptake of 2.2 million square feet, marking a year-over-year increase of 22 percent.
According to the report’s findings, the tech industry remained a key driver of office space requirements, renting 4.4 million square feet of traditional office space in Q1 2025, which constituted 28 percent of overall demand for the period. The sectors of BFSI and Engineering & Manufacturing also showed robust interest with 3.4 million square feet and 2.4 million square feet leased respectively, collectively making up 36 percent of all conventional spaces occupied during this time frame. (ANI)