Gross office leasing reaches 18.7 million sq ft in July-September, with Bengaluru, Delhi-NCR and Hyderabad driving growth while Mumbai, Pune and Chennai record declines
India’s commercial real estate market continued to show healthy demand during the July-September quarter, with gross office leasing across the country’s seven major cities estimated to have increased 9 per cent year-on-year, according to data from real estate consultancy Colliers India.
Gross office space absorption is estimated at 18.7 million square feet during the third quarter, compared with 17.2 million sq ft in the corresponding period a year earlier. The increase highlights continued corporate demand for workplace space despite differences in leasing activity across individual markets.
Bengaluru, Delhi-NCR, Hyderabad and Kolkata recorded year-on-year growth in office leasing, while Mumbai, Pune and Chennai witnessed declines.
Bengaluru Remains a Major Office Leasing Hub
Bengaluru continued to account for one of the largest shares of office leasing among the major Indian markets.
Gross leasing in the technology and corporate hub increased 11 per cent year-on-year to 5.2 million sq ft in the July-September quarter, compared with 4.7 million sq ft in the same period last year.
The city's large technology ecosystem, presence of global capability centres, IT services companies and expanding corporate operations continue to support demand for commercial office space.
The sustained activity in Bengaluru also reflects the importance of the city as a destination for both established enterprises and companies expanding their workforce and operational footprint.
Delhi-NCR Leasing More Than Doubles
Delhi-NCR recorded one of the sharpest increases among the major office markets.
Office leasing in the region more than doubled to 3.3 million sq ft in the July-September quarter from 1.6 million sq ft a year earlier.
The strong increase indicates renewed demand across the National Capital Region, supported by corporate occupiers and businesses seeking modern office facilities in prominent commercial locations.
The region's diversified occupier base also provides support to demand beyond the traditional technology sector.
Hyderabad Records 47% Growth
Hyderabad also witnessed a substantial increase in commercial office demand.
Gross leasing rose 47 per cent year-on-year to 2.2 million sq ft in the quarter from 1.5 million sq ft during the corresponding period last year.
The city has emerged as an important destination for technology companies, global capability centres, financial services firms and other large corporate occupiers.
Continued investment by multinational companies and the availability of large-scale modern office developments have helped Hyderabad maintain its position among India's major office markets.
Kolkata Sees Four-Fold Increase
Kolkata recorded a particularly sharp percentage increase, although from a relatively smaller base.
Office leasing increased four-fold to around 0.4 million sq ft during July-September, compared with only 0.1 million sq ft in the year-ago quarter.
The rise indicates an improvement in commercial real estate activity in the eastern market, although the absolute volume remains considerably lower than that of Bengaluru, Delhi-NCR, Mumbai, Pune or Hyderabad.
Mumbai, Pune and Chennai See Decline
Not all major markets experienced growth during the quarter.
Mumbai recorded a 20 per cent year-on-year decline in gross office leasing, with absorption falling to 2.4 million sq ft from 3 million sq ft a year earlier.
Pune also reported weaker activity, with leasing declining 14 per cent to 3.2 million sq ft from 3.7 million sq ft.
Chennai witnessed a 23 per cent decline, with gross office leasing dropping to 2 million sq ft from 2.6 million sq ft in the corresponding period last year.
The divergent performance across cities indicates that India's office market is expanding unevenly, with occupier demand being influenced by local economic activity, available Grade-A supply, rental levels, business concentration and corporate expansion plans.
What Gross Office Leasing Indicates
Gross absorption is an important indicator of demand in the commercial real estate market. However, the metric used in the Colliers data excludes certain transactions, including lease renewals, pre-commitments and deals where only a Letter of Intent has been signed.
The measure therefore focuses on completed leasing activity rather than every potential office transaction in the pipeline.
Developers can lease office properties directly to corporate occupiers. At the same time, real estate companies may provide space to co-working operators, who subsequently sub-lease portions of those premises to individual companies and businesses.
Global Capability Centres Remain Important Demand Drivers
One of the structural factors supporting India's office market is the continued expansion of global capability centres and multinational operations.
Companies increasingly use Indian offices for technology development, research, analytics, finance, consulting and other specialised functions. This has created demand for larger and more sophisticated workspaces in established business hubs.
Cities such as Bengaluru, Hyderabad, Delhi-NCR, Chennai and Pune have benefited from this trend, although the latest quarterly numbers show significant variation in leasing volumes.
Hybrid Work Has Not Eliminated Office Demand
The latest leasing figures also suggest that the shift towards hybrid working has not eliminated the need for physical offices.
Businesses continue to require office facilities for collaboration, employee engagement, training, client meetings and specialised operations. Many companies are also focusing on better-quality workplaces rather than simply maintaining large traditional office footprints.
This has increased the importance of Grade-A buildings, strategically located business districts and facilities that can meet modern corporate requirements.
Co-Working and Flexible Office Space Continue to Evolve
Flexible workspace operators are another important component of India's commercial property ecosystem.
Companies increasingly use co-working and managed-office providers when they require flexibility in terms of lease duration, office size and expansion capacity. This model can allow businesses to scale their physical presence without making large long-term commitments at the outset.
The continued participation of flexible workspace providers can therefore support office absorption while changing the way corporate occupiers access commercial real estate.
What the Numbers Mean for Developers
The 9 per cent increase in overall leasing is significant for commercial property developers because sustained tenant demand can support occupancy levels, rental growth and new project launches.
However, the city-level divergence suggests that developers may need to adopt market-specific strategies rather than assuming uniform growth across the country.
Markets showing stronger leasing momentum could see greater interest in new office developments, while weaker markets may require more careful assessment of supply, pricing and tenant demand.
Commercial Real Estate Investment in Focus
For investors, the latest leasing data provides an important indicator of corporate confidence and economic activity.
Strong office absorption can benefit commercial property owners through higher occupancy and rental income. It can also support demand for related services such as facilities management, construction, commercial interiors and flexible workspaces.
At the same time, investors need to consider interest rates, property valuations, construction costs, vacancy levels and the pace at which new office supply enters each market.
Market Outlook
India's office market remained resilient during the July-September quarter, with gross leasing across the top seven cities rising 9 per cent to an estimated 18.7 million sq ft.
The strongest momentum came from Delhi-NCR and Hyderabad, while Bengaluru continued to record the highest absolute leasing volume among the reported markets. Kolkata also recorded a sharp percentage increase from a relatively small base.
The declines in Mumbai, Pune and Chennai underline the uneven nature of the recovery and suggest that location-specific factors will remain important for commercial real estate performance.
Going forward, corporate expansion, global capability centre activity, technology-sector demand, hybrid-workplace strategies and the availability of high-quality office stock will remain key factors shaping India's commercial property market. For investors, the next focus will be whether strong leasing activity translates into sustained occupancy, rental growth and improved financial performance for commercial real estate companies and related businesses.