India’s office leasing activity continued to display remarkable resilience through Q3 2025, with total gross absorption of 66.7 million sq ft recorded across the top eight markets between January and September — a 24% year-on-year increase, according to Knight Frank India’s latest quarterly report.

The strong momentum, led by Global Capability Centres (GCCs) and a rebound in third-party IT services, positions the market to surpass all previous annual records by year-end. Despite global uncertainties, sustained occupier confidence, healthy demand, and moderated new supply have pushed vacancy levels down to 14.5%, reaffirming India’s standing as a key global office destination.

In Q3 2025, Global Capability Centres (GCC) remained the largest end-user occupier segment with gross leasing of 5.7 mn sq ft while Third-party IT Services recorded significant improvement of 38% YoY with gross leasing of 3.2 mn sq ft in Q3 2025. Continued demand and modest growth in new completions has led to vacancy to decline to 14.5%.

With new completion of 12.4 mn sq ft in Q3 2025, the office space stock crossed over 1 bn sq ft milestone.

Bengaluru leads leasing activity

Bengaluru continued its frontrunner position, recording 4.2 mn sq ft of transactions in Q3 2025. Hyderabad with 2.9 mn sq ft and Chennai with 2.8 mn sq ft followed Bengaluru. Hyderabad also stood out due to YoY growth of 33% largely driven by strong demand from GCCs.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “India’s office market has once again demonstrated resilience, building on last year’s record highs. The strong year-to-date growth underlines the enduring confidence of global and domestic occupiers in India’s economic fundamentals. While the external environment remains volatile, India’s large talent pool and stable policy framework continue to reinforce its position as a preferred destination for high-quality office investments. With transaction activity outpacing supply, we expect rent growth to sustain in the coming quarters.”

Global Capability Centres anchor demand

In Q3 2025, GCCs were the largest occupier group, transacting 5.7 mn sq ft or 32% of total leasing activity. Bengaluru dominated this segment, accounting for 65% of all GCC-related transactions. Hyderabad and Chennai also saw GCCs drive demand, with a 45% and 51% share of their respective leasing activity.

The resurgence of third-party IT services was another key highlight. This segment leased 3.2 mn sq ft, comprising 18% of overall transactions, a robust 38% growth from the same quarter last year. With accelerating adoption of artificial intelligence globally, India’s talent base and cost advantages continue to bolster the country’s role as a hub for IT outsourcing.

Flex space operators remained consistent contributors, leasing 3.8 mn sq ft during the quarter, representing 21% of transactions and a 27% YoY growth. India-facing businesses, however, saw their share moderate to 28% compared with 35% in Q3 2024.

Rental growth and supply dynamics

Rents across all major markets registered growth on a year-on-year basis. Kolkata led with a 14% increase, followed by Mumbai (11%), NCR (9%), Hyderabad (9%), and Bengaluru (6%). This marked the 13th consecutive quarter of stable or rising rents across India’s office markets.

During the quarter, new completions stood at 12.4 mn sq ft. Bengaluru alone delivered 5.9 mn sq ft, accounting for 48% of the total. Other markets saw relatively limited deliveries. With development activity trailing transactions, vacancy levels declined to 14.5% in Q3 2025 from 14.9% a year earlier. The total office stock in India crossed the 1 billion sq ft milestone during the quarter.

Viral Desai, Senior Executive Director, Occupier Strategy & Solutions, Industrial & Logistics, Capital Markets and Retail Agency, Knight Frank India, said, “Despite ongoing geopolitical challenges, their macroeconomic impact, and the evolving work environment driven by advancements in AI and other technologies, the office market demonstrated remarkable growth in Q3 2025. Anchored by the expansion of Global Capability Centres (GCCs), all end-user categories registered growth in absorption during the year thus far. India remains a significant global office market, offering value and cost advantages to international occupiers, underscoring the sector’s resilience and strong positioning for long-term growth. While 2025 is expected to close at a new high ~ 85 mn sq ft, office leasing activity will need to be monitored closely in the coming years.”