Grade A office leasing up 11% in Q2 CY25, led by flex space demand: Report

Indian commercial real estate likely to have 'another impressive year' in 2025: Colliers

Gross grade A office leasing in India’s top seven cities in the second quarter of calendar year 2025 (Q2 CY25) grew 11 per cent to 17.8 million square feet (msf) from the year before, according to a report by Colliers.

 

Leasing growth amid global uncertainties was driven by “occupier confidence”, particularly from flexible space operators and technology, finance, engineering and manufacturing companies, it said.

 

In Q2 CY25, five of the top seven office markets in India witnessed growth in grade A space uptake. Bengaluru led leasing activity with a 27 per cent share at 4.8 msf but growth was flat. Hyderabad, Mumbai, and Chennai each recorded over 2.5 msf of leasing in the quarter. However, space uptake in Mumbai declined 20 per cent year-on-year.

   

"The robust performance in the first half — with demand reaching 33.7 msf, a 13 per cent year-on-year increase — signals sustained occupier confidence and strong market fundamentals,” said Arpit Mehrotra, managing director, office services, India, Colliers. 

 

“Backed by a diversifying occupier base, a steady supply pipeline and growing investor appetite, 2025 is shaping up to be another impressive year for commercial real estate in India. Overall, office space demand looks well placed to reach 65-70 msf at least by the end of the year," he said.

 

Gross absorption does not include lease renewals, pre-commitments and deals where only a letter of intent has been signed.

 

Meanwhile, overall supply during the quarter grew by 11 per cent YoY to 14.9 msf. However, cities including Delhi NCR, Mumbai, Kolkata, and Hyderabad recorded a decline on a YoY basis.

 

Of the total 17.8 msf of leasing in Q2 CY25, leasing by flex space operators stood at 4.3 msf. Conventional leasing remained at 13.5 msf, led primarily by the technology and BFSI sectors. Technology firms alone accounted for 6.4 msf space uptake—a 42 per cent YoY growth, driven largely by Global Capability Centre (GCC) expansion.

 

“Despite the global uncertainty, the demand for office space continues to gain momentum, driven by competitive operating costs and the growing availability of build-to-suit facilities,” said Amal Mishra, founder and chief executive officer, Urban Vault, which provides co-working spaces.

 

 

“This rising demand is not limited to start-ups or small enterprises; large corporations and GCCs are also actively seeking flexible and customised workspaces,” said Mishra.

 

Additionally, the overall vacancy level remained almost stable at 16.2 per cent amid relocations and churns. However, Pune and Hyderabad, with significant completions in Q2 CY25, were at relatively higher vacancy levels.