The office market in Delhi-NCR experienced a sluggish start to 2025, with leasing activity declining sharply in the January-March quarter, primarily due to a reduction in new supply, according to JLL India. The real estate consultancy firm reported that gross leasing, which encompasses all office lease transactions during the quarter excluding renewals, decreased by 28% to 3 million square feet, down from 4.2 million square feet in the same period last year.
Net Leasing Sees Steeper Decline
Net leasing, which measures occupied office space after accounting for vacated areas, witnessed an even more pronounced drop of 60%, falling to 1.5 million square feet from 3.7 million square feet a year earlier. The primary driver of this downturn was the significant reduction in fresh supply. New office space supply in Delhi-NCR plummeted to 1.39 million square feet during the quarter, compared to 2.9 million square feet in the corresponding quarter of the previous year.
Long-Term Prospects Remain Positive
Despite the weak quarterly performance, JLL India emphasized that the Delhi-NCR office market retains strong fundamentals over the long term, with leasing activity expected to pick up in the coming quarters. Major developers continue to demonstrate robust activity in the region. DLF holds a substantial office portfolio in Delhi-NCR, while Bharti Realty and Max Estates remain key players. Signature Global recently formed a partnership with RMZ Group to develop a large-scale commercial project in Gurugram, involving an investment of approximately Rs 7,500 crore. This project will encompass 55 lakh square feet of leasable space, including around 35 million square feet of prime office space, along with retail areas and two hotels, each with about 500 rooms. Gaurs Group is also planning office projects in Noida.
National Office Market Shows Resilience
While Delhi-NCR witnessed weaker numbers, office leasing across India's seven largest cities performed better. These cities—Mumbai, Bengaluru, Delhi-NCR, Pune, Hyderabad, Chennai, and Kolkata—recorded a 10% increase in gross leasing, reaching 21.5 million square feet during January-March. Net absorption across these cities also rose by 7% to 13.7 million square feet.
JLL attributed much of this growth to foreign companies establishing Global Capability Centres (GCCs). Rahul Arora, Head of Office Leasing & Retail Services and Senior Managing Director (Karnataka, Kerala) at JLL India, stated, "Market fundamentals continue to strengthen, with pan-India vacancy dropping to a five-year low of 14.7%. India is transitioning from being primarily a cost centre to becoming a larger innovation hub, with Bengaluru leading this transformation."
Industry Perspectives on Structural Shifts
Vibhor Jain, Founder and CEO of Carbon Guardians, commented, "We believe India's office market is in the midst of a genuine structural shift, not merely another cycle. Demand remains robust, but we must remain realistic. Prolonged geopolitical tensions could escalate energy, logistics, and fit-out costs, even if the world eventually adapts." He also noted that artificial intelligence is reshaping the traditional IT services model, impacting office demand based on employee headcount. "The opportunity now lies in building the right quality of workplace for a more selective and evolving occupier base," Jain added.
