Office rentals across India have strengthened further, supported by an all-time high leasing performance in 2025, extending a multi-year upcycle as sustained occupier demand outpaced fresh supply, tightening the availability of quality Grade A space across major markets.Backed by steady economic growth and sustained capital expenditure, occupiers are increasingly locking in large, long-duration office commitments, supporting rental growth even as supply additions remain disciplined amid global volatility.Also Read: India’s real estate sector sees Rs 17,867 crore raised via capital markets in FY26 YTD: Equirus CapitalAcross key markets, office rentals rose up to 16% from a year ago in the second half of 2025, led by Kolkata with 16% growth, followed by NCR and Hyderabad at 10% each, according to Knight Frank India data.The country’s commercial capital, Mumbai, and largest office market, Bengaluru, recorded rental growth of 6% each during the year, underscoring improved pricing power amid low vacancy levels and rising preference for institutional-grade assets.“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. The fact that five major markets recorded their highest-ever transaction levels, each crossing the 10 million sq ft threshold, highlights the geographically diversified nature of this expansion,” said Shishir Baijal, International Partner & CMD, Knight Frank India.Live EventsAccording to him, geographically diversified demand and disciplined supply have placed the sector on a strong footing as it enters 2026.“The robust rental growth and record leasing volumes in 2025 underscore the resilience of India’s office market. Strong demand for Grade A space, coupled with disciplined supply, reflects a structural shift in occupier strategy toward long-term, quality commitments. We remain optimistic about 2026, with sustained demand likely to support healthy rental appreciation across key markets,” said Quaiser Parvez, COO, Knowledge Realty Trust.With Grade A assets accounting for over 90% of leasing activity and occupiers committing to larger, long-term deals, industry experts expect rental values to remain firm in the near term, supported by steady demand and limited near-term supply additions.“From a sectoral perspective, 2025 marked a decisive shift toward globally aligned demand patterns. GCCs accounted for 38% of leasing, while third-party IT services and flexible workspaces recorded their highest-ever absorption, underscoring renewed confidence among technology-led occupiers,” said Viral Desai, International Partner & Senior Executive Director, Knight Frank India.According to him, rising average deal sizes and longer lease tenures indicate a preference for larger, long-term commitments, highlighting evolving occupier strategies centred on talent access, operational efficiency, and scalable growth.Vacancy levels across the top eight office markets stood at 15.1% in 2025, even as new completions remained modest compared with leasing volumes.The rental momentum came on the back of a record year for office leasing, with pan-India transactions hitting an all-time high of 86.4 million sq ft in 2025, a 20% jump over the previous year and well above the pre-pandemic peak of 2019. This marked the strongest performance ever recorded by India’s office market.Bengaluru retained its position as the country’s largest office market, clocking a historic high of 28.7 million sq ft of leasing during the year. Hyderabad followed with 11.4 million sq ft, while NCR recorded 11.3 million sq ft. Pune and Chennai also crossed the 10 million sq ft threshold. Mumbai, at 9.8 million sq ft, narrowly missed the milestone, the data showed.Global Capability Centres emerged as the single largest demand driver, accounting for 38% of total office absorption at 31.8 million sq ft during the year.Flexible workspace operators posted their highest-ever annual absorption at 18.8 million sq ft, while third-party IT services made a sharp comeback, leasing 15.3 million sq ft, nearly doubling their volumes year on year as technology-led demand revived.While leasing surged, new office supply rose by a relatively modest 9% year on year to 54.8 million sq ft in 2025, further accentuating the demand-supply imbalance. Bengaluru led new completions with 16.2 million sq ft, followed by Pune at 14.2 million sq ft.



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