Indian Office Leasing Market Shows Mixed Performance: 6% Quarterly Decline Amid Projected Record Annual Growth

New Delhi:

Office space leasing across India's eight major cities declined by 6 percent during the July-September quarter due to reduced demand amid global economic uncertainties, according to Knight Frank's latest report released Tuesday. Despite this quarterly dip, the real estate consultant remains confident that the full calendar year will achieve record workspace absorption figures.

Knight Frank India's report, presented via webinar, revealed that gross office space leasing reached 17.8 million square feet across the eight major metropolitan areas during the third quarter, representing a 6 percent decrease compared to the same period last year.

A significant factor in this decline was the 20 percent reduction in leasing by foreign companies establishing Global Capability Centers (GCCs), which fell to 5.7 million square feet from the previous 7.1 million square feet, negatively impacting the overall absorption numbers for the September quarter.

Despite the quarterly decline, the cumulative gross leasing for January-September exhibited strong growth, increasing 24 percent year-on-year to reach 66.7 million square feet.

"We anticipate record-breaking gross office space leasing of approximately 85 million square feet this year, despite numerous global headwinds," stated Viral Desai, Senior Executive Director of Occupier Strategy & Solutions, Industrial & Logistics, Capital Markets and Retail Agency at Knight Frank India.

Nevertheless, Desai acknowledged that leasing activity trends across the first three quarters of 2025 indicate some market sluggishness, with gross leasing declining from 28.2 million square feet in Q1 (January-March) to 20.7 million square feet in Q2 (April-June), and further to 17.8 million square feet in the most recent September quarter.

City-specific data showed Bengaluru experiencing a 21 percent drop in office space leasing to 4.2 million square feet during July-September, although the IT hub recorded impressive 63 percent growth to 22.5 million square feet for the January-September period.

Hyderabad demonstrated strong performance with a 33 percent increase to 2.9 million square feet in the September quarter, while its year-to-date absorption rose 21 percent to 8.8 million square feet in the first nine months of 2025.

Chennai reported 9 percent growth in office leasing during July-September, reaching 2.8 million square feet, with workspace absorption surging 41 percent to 7.9 million square feet for the January-September period.

Delhi-NCR saw office leasing decline by 15 percent to 2.7 million square feet in the September quarter, though overall absorption increased 12 percent to 9.9 million square feet for the year's first nine months.

Pune experienced a 9 percent quarterly decline to 2.3 million square feet, but still managed 7 percent growth to 7.4 million square feet for January-September.

Mumbai's office leasing dropped significantly by 27 percent to 1.9 million square feet in the September quarter, with the financial capital recording a 12 percent decrease for January-September to 7.4 million square feet.

Kolkata demonstrated remarkable growth with a 190 percent increase to 0.5 million square feet during July-September, and impressive 87 percent growth for January-September, reaching 1.6 million square feet.

Finally, Ahmedabad saw office space leasing rise by 13 percent in the September quarter to 0.4 million square feet, despite experiencing a 41 percent decline for January-September to 1.2 million square feet.