India's Commercial Office Market Shows Steady Growth with Rising Rents and High Demand

Real Estate

28th October 2025, 8:52 AM

India's Commercial Office Market Shows Steady Growth with Rising Rents and High Demand

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Short Description :

India's commercial office market experienced robust growth in the first nine months of 2025, with average rentals climbing 6% year-on-year to Rs 90 per sq. ft. Net office absorption surged 34% to 42 million sq. ft., exceeding pre-pandemic levels. Vacancy rates slightly decreased to 16.2%, despite increased new office completions. The IT/ITeS, coworking, and BFSI sectors are the primary drivers of this demand, showcasing resilience and long-term potential in India's economy.

Detailed Coverage :

India's commercial office sector demonstrated strong performance in the first nine months of 2025, with average rentals rising by 6% to Rs 90 per square foot compared to the same period last year. Bengaluru led rental growth with a 9% increase, followed by Pune and Delhi-NCR. Despite developers adding 15% more supply, vacancy levels saw a minor dip from 16.7% to 16.2%, with Chennai exhibiting the lowest vacancy at 8.9%.

Net office absorption across the top seven cities jumped an impressive 34% year-on-year, reaching 42 million sq. ft., which is also 30% higher than pre-pandemic 2019 levels. Pune recorded a remarkable 97% surge in office leasing, while Bengaluru led in total absorption. The IT and ITeS sector accounted for the largest share of leasing (27%), followed by coworking (23%) and BFSI (18%). This sustained demand highlights the confidence in India's economic prospects.

Impact: This news is highly positive for the Indian real estate sector, indicating strong demand for commercial properties. It suggests robust business expansion and job creation, particularly in the IT and ITeS segments. This can lead to increased revenue for real estate developers and ancillary businesses. The overall economic sentiment appears strong. Rating: 8/10

Definitions: * **Net office absorption**: The total amount of office space leased out by businesses during a specific period, minus the amount of office space vacated by businesses. It indicates demand for office space. * **Vacancy levels**: The percentage of available office space that is currently unoccupied. Lower vacancy rates suggest a tighter market with higher demand relative to supply. * **IT and ITeS**: Information Technology and IT-enabled Services. This sector is a major occupier of commercial office space in India. * **BFSI**: Banking, Financial Services, and Insurance. This sector is also a significant contributor to office space leasing. * **Coworking spaces**: Shared office environments offering flexible workspace solutions for individuals and companies.