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Office Space Leasing Grows 26% in India in 2018

By PropertyGeld Editorial Team

Published on PropertyGeld: 5 Oct 2026

Office Space Leasing Grows 26% in India in 2018

Office Leasing Demand Shows Strong Growth

India's office real estate market recorded strong leasing activity during the first nine months of 2018. Gross office leasing reached around 36.4 million sq ft, representing a 26% year-on-year increase compared with the same period in 2017.

The growth was mainly supported by technology companies, banking and financial services, insurance firms and the rapidly expanding flexible workspace sector.

Technology Companies Drive Office Demand

The technology sector was the biggest contributor to office leasing during the period.

Technology companies accounted for approximately 48% of Grade A office leasing demand in Q3 2018. Banking, financial services and insurance followed with around 19% of the leasing volume.

The continued expansion of IT companies created demand for larger and better-quality office spaces across India's major business destinations.

Bengaluru Remains the Leading Market

Bengaluru continued to dominate India's office leasing market.

During Q3 2018, the city accounted for around 30% of the leasing activity, with approximately 3.7 million sq ft of office space absorbed during the quarter. This was a significant increase compared with the same quarter of the previous year.

The city's strong technology ecosystem, skilled workforce and improving infrastructure supported continued demand for Grade A office buildings.

Hyderabad Sees Strong Growth

Hyderabad emerged as another major office market during the quarter.

The city recorded around 2.13 million sq ft of gross office leasing in Q3 2018. Large transactions by technology companies helped push leasing activity significantly higher compared with the previous quarter.

The IT and IT-enabled services sector was expected to remain an important source of office demand in Hyderabad.

Mumbai Office Market

Mumbai recorded approximately 1.9 million sq ft of office absorption in Q3 2018, showing an 11% increase compared with the previous quarter.

Important office locations included:

Andheri East
Navi Mumbai
LBS Road and eastern suburbs
Goregaon
JVLR

Flexible workspace operators were particularly active in Mumbai, accounting for a significant share of leasing during the quarter.

Gurugram Office Market

Gurugram experienced a temporary slowdown in office leasing during Q3 2018.

Gross absorption fell to approximately 0.80 million sq ft, largely because companies were taking longer to make leasing decisions.

However, companies were still expanding their operations, and the market was expected to regain momentum towards the end of 2018.

A substantial office supply pipeline was also expected to enter the Gurugram market over the following years.

Delhi Office Market

Delhi recorded around 0.14 million sq ft of office absorption in Q3 2018.

The decline was partly linked to limited availability of quality Grade A office space in important commercial areas such as the Central Business District and Aerocity.

Additional office supply was expected to come into the market between 2018 and 2021, with a large portion concentrated in South Delhi.

Pune Office Market

Pune recorded approximately 1.8 million sq ft of office absorption in Q3 2018, more than double the previous quarter's level.

Technology companies and flexible workspace operators were among the key sources of demand.

Areas such as Nagar Road, Baner and Kharadi also recorded rental growth because of sustained demand for office space.

Chennai Office Market

Chennai recorded around 760,000 sq ft of office leasing in Q3 2018, taking its year-to-date absorption to approximately 2.8 million sq ft.

Although year-to-date absorption was lower than the previous year, steady enquiries from companies were expected to support future demand.

The city was also expected to receive substantial new office supply over the following few years.

Kolkata Office Market

Kolkata recorded approximately 300,000 sq ft of gross office absorption in Q3 2018, representing a quarterly increase of about 50%.

The Peripheral Business District and Sector V accounted for a large share of Grade A office leasing.

Technology developments were an important contributor to office demand in the city.

Flexible Workspaces Become More Important

Co-working and flexible office operators were becoming an increasingly important part of India's commercial property market.

Flexible workspaces represented around 13% of pan-India office leasing volume in Q3 2018, almost double their share from the comparable period a year earlier.

The growth was driven by companies looking for flexible workplace arrangements and ways to manage real estate costs.

Future Office Market Outlook

The 2018 report expected India's office market to remain relatively strong over the following years.

The forecast suggested that average annual gross absorption could reach around 46 million sq ft between 2018 and 2021, compared with average new supply of approximately 41.2 million sq ft.

Bengaluru was expected to record one of the fastest rates of rental growth among India's major office markets.

Conclusion

India's office real estate market showed strong momentum during the first nine months of 2018, with leasing activity increasing 26% year-on-year to 36.4 million sq ft.

Bengaluru, Hyderabad and Mumbai were the strongest markets highlighted in the report, while Gurugram, Delhi, Noida, Pune, Chennai and Kolkata also formed part of the national office-market analysis.

The expansion of technology companies, growing demand for flexible workplaces and improving business conditions were important factors behind the increase in office-space absorption.

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