India's office market hits a new peak in 2025 as GCCs take 38% share and supply crunch looms

India’s office market concluded 2025 with a record-breaking performance, as annual gross leasing surged to 86.4 million square feet (mn sq ft), registering a 20% year-on-year (YoY) increase and surpassing the previous peak achieved in 2024, according to Knight Frank India's flagship report on India's residential and office market for H2 2025. The data shows the growth in 2025 represents a 43% rise over the pre-pandemic high recorded in 2019, highlighting the sustained expansion of occupier demand over the past four years.

Bengaluru continued its dominance as the largest office market, grossing 28 mn sq ft, a historic best for this market. Hyderabad (11.4 mn sq ft), National Capital Region (NCR) (11.3 mn sq ft), Pune (10.8 mn sq ft) and Chennai (10.1 mn sq ft) all crossed a 10 mn sq ft benchmark, with Mumbai (9.8 mn sq ft) narrowly missing the line. GCCs drove demand, commanding 38% of the total absorption. 

Leasing activity during H2 2025 stood at 37.5 mn sq ft, second only to the exceptionally high absorption recorded in H1 2025 (January – June 2025), 48.9 mn sq ft, supported by a favourable macroeconomic environment and India’s growing role in global business operations.

Global Capability Centres (GCCs) anchored the market, accounting for 38% of total annual transactions at 31.8 mn sq ft, strengthening India’s position among global peers as a centre of excellence in research and development and other related businesses. Flex space took up 18.8 mn sq ft, representing 22% share of total gross leasing in 2025. Third-party IT services took up 15.3 mn sq ft during the year, accounting for 20% of the transacted area, with its volumes growing 94% YoY.

Market faces supply crunch, leads to rent spike

Even as office leasing activity remained robust, new office completions could not catch up to that pace and rose by a more modest 9% YoY to reach 54.8 mn sq ft in 2025. Here too, Bengaluru saw the highest volume of 16.2 mn sq ft, followed by Pune with 14.2 mn sq ft. As supply remained muted compared to leasing volumes, rents firmed up further across all markets over the course of the year, driving rental growth. 

The Knight Frank’s report shows that all office markets recorded rental appreciation in 2025, mostly due to low availability of quality space, led by NCR and Hyderabad with 10% growth each, followed by Mumbai and Bengaluru, both registering rental increases of 6%.

With annual leasing volumes rising more than 20% year on year, the current cycle marks not just a numerical high but a structural shift in how global and domestic enterprises view India as a long-term business destination, believes Shishir Baijal, International Partner, Chairman and MD, Knight Frank. “The fact that five major markets recorded their highest-ever transaction levels, each crossing the 10 mn sq ft threshold, highlights the geographically diversified nature of this expansion.” 

Viral Desai, International Partner, Senior Executive Director- Occupier Strategy & Solutions, says GCCs accounted for 38% of total leasing, while third-party IT services and flexible workspaces recorded their highest-ever absorption. “Together, these trends point to a clear preference for larger, long-term commitments, highlighting evolving occupier strategies centred on talent access, operational efficiency and scalable growth.”

Office completion was recorded at a very robust 54.8 mn sq ft, registering an annual growth of 9% over 2024, while rents firmed up across all markets over the course of the year, as Indian landlords have been able to negotiate better terms in a market that has seen the strongest office markets struggle globally. “Rents grew between 1% and 16% YoY across all markets in H2 2025, with Kolkata growing at 16% YoY while NCR and Hyderabad grew at 10% YoY each, respectively.”