Hyderabad now has the highest level of empty office space among India’s top seven cities. Since 2020, the city has added 59 million square feet of new office space. However, only 48.5 million square feet has been taken up, leaving a large chunk unused.
By the end of Q1 2025, Hyderabad’s vacant office space reached 28 million square feet—the most among all major metros. With several new office projects underway, the vacancy number is likely to rise even more.
Across India, office construction activity fell sharply. In Q1 2025, total construction dropped 39% compared to the previous quarter and 12% from the same time last year, landing at 9.5 million square feet. Cities like Hyderabad, Chennai, Mumbai, and Kolkata saw little or no new supply during this period.
Despite the construction slowdown, office leasing remained solid. India’s top cities recorded 17.96 million square feet of space leased in Q1 2025—a 34% jump from a year ago. Western cities like Mumbai and Pune drove this growth. Their share of total leasing rose from 24% in Q1 2024 to 37% in Q1 2025.
The IT and ITeS sector remains a strong force behind this demand. It made up 34% of office space leased nationwide in Q1 2025, just below the 36% share from the previous quarter. The rise of artificial intelligence is also influencing how tech companies plan their office expansions.
Shrinivas Rao, CEO of Vestian, commented, “The Indian office market stayed strong in early 2025. Key sectors like GCCs, IT-ITeS, BFSI, and flexible office providers kept demand steady. Even though leasing dipped slightly from the last quarter, future demand still looks promising.”
Here’s a snapshot of Q1 2025 office market performance:
– Bengaluru topped the country with 4.08 million sq. ft. leased, making up 23% of India’s total. This was a slight 3% drop from the previous quarter.
– Mumbai followed closely with 3.99 million sq. ft., marking a 60% rise year-on-year, though it slipped 11% from the last quarter.
– Pune showed massive growth, leasing 2.66 million sq. ft., a 276% jump compared to last year. Its market share rose from 5% to 15%.
– Chennai saw the biggest annual drop, with leasing down 52% to just 1.6 million sq. ft.
– The NCR (Delhi) market absorbed 2.73 million sq. ft., a 51% rise over the previous year.
– Kolkata, though the smallest market, leased 0.23 million sq. ft., up 44% year-on-year and 289% from the last quarter.
Looking at new office completions:
– Bengaluru led with 3.5 million sq. ft., making up 37% of all new supply.
– Pune followed with 2.9 million sq. ft., or 31% of the total.
– NCR doubled its completions to 2.6 million sq. ft., a 44% jump from the previous quarter.
In Bengaluru, GCCs (Global Capability Centers) took the largest share of leasing activity. They accounted for 39% of the city’s absorption—a 39% rise from the last quarter and a whopping 119% increase from a year ago.
Meanwhile, Hyderabad, despite a 17% increase in annual leasing, saw almost no new office space completed in Q1 2025. As a result, its vacancy rate has hit a new high, reflecting the growing gap between supply and demand.
