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Key Points

The IT sector continues to dominate India's office leasing market, capturing 50% share in Q2 2025. Flex spaces saw a 68% quarterly jump but remain secondary at 14% absorption. Southern cities like Bengaluru and Hyderabad led demand, contributing 80% of metro leasing. Experts predict record-breaking 75 million sq ft absorption by year-end as companies expand office footprints.

Key Points: IT Sector Leases 50% of India Office Space in Q2 2025

  • IT-ITeS leasing surged to 50% share in Q2 2025
  • Flex spaces grew 68% quarterly to 14% absorption
  • Bengaluru, Hyderabad, Mumbai drove 80% metro demand
  • BFSI sector leasing dropped to 6% from 20% last quarter
2 min read

IT sectors lease 50 pc office spaces in India in April-June, Flex spaces at 14 pc

IT-ITeS dominates India's commercial real estate with 50% leasing share while flex spaces grow to 14% as Bengaluru, Hyderabad lead demand.

"We anticipate absorption to surpass 75 million sq ft by 2025, potentially the highest-ever. – Vestian Report"

New Delhi, July 25

The Information Technology-enabled Services (ITeS) and IT sectors in India continue to dominate the commercial real estate (CRE) leasing segment, accounting for 50 per cent of absorption during April-June (Q2 2025), up from 36 percent in the previous quarter, a report said on Friday.

Flex spaces trailed behind, accounting for 14 per cent of the total absorption, an increase from 9 per cent in the previous quarter. The area absorbed by flex spaces increased by 68 per cent over the previous quarter. The southern cities of Bengaluru, Chennai and Hyderabad accounted for 80 per cent of absorption in metro cities, the report from CRE firm Vestian said.

Despite the surge in flex spaces, the IT-ITeS (Information Technology-enabled Services) sector remains the leading force in this segment, accounting for 9.4 million square feet in Q2 2025. Half of this leasing came from the localities of Bengaluru's Yeshwantpur, Hyderabad's Nanakramaguda, and Mumbai's Airoli.

The top seven cities recorded 36.75 million sq ft of absorption from the IT-ITeS in H1 2025, registering a 21 per cent increase over the same period year on year (YoY). BFSI follows closely behind with six per cent of absorption in this segment, down from 20 per cent in the previous quarter.

"With this growth rate, we anticipate absorption to surpass 75 million sq ft by the end of 2025, potentially reaching the highest-ever absorption in any calendar year," the report said.

“India’s office market continued to grow in Q2 2025, largely driven by robust absorption in major cities like Bengaluru, Hyderabad, and Mumbai. As more enterprises are transitioning back to in-office operations and several grade-A office projects are planned to be completed in the second half of 2025, the growth momentum is anticipated to continue with an increase in office utilisation ratio,” said Shrinivas Rao, CEO, Vestian.

Flex spaces are a type of commercial real estate that allows shorter leases (often from 7 months to a few years), and these combine office, industrial, and sometimes warehousing functions within the same property.

“So, businesses opting for flex spaces enjoy adaptable and customisable workspaces. Companies opt for flex spaces due to their short leases, which enable them to scale up or down quickly and reduce upfront capital costs,” said the report.

- IANS

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Reader Comments

P
Priya S
While the numbers look impressive, I hope developers aren't just focusing on grade-A offices. We need more affordable workspaces for small businesses too. The 14% flex space growth is promising though - shows companies are becoming smarter about real estate costs.
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Aman W
Southern cities dominating again! 80% absorption is huge. But what about tier 2 cities? Govt should incentivize IT companies to expand beyond Bengaluru/Hyderabad to reduce pressure on infrastructure in these metros. #BalancedGrowth
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Sarah B
The 68% quarterly growth in flex spaces is remarkable! Shows how workplace culture is evolving post-pandemic. Indian companies are finally embracing hybrid models that global firms adopted years ago. Better late than never!
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Karthik V
As someone working in Airoli, I can confirm the IT boom here. But the traffic situation is becoming unbearable! Authorities need to improve infrastructure alongside this commercial growth. More metro connectivity please!
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Nisha Z
Interesting to see BFSI sector's share drop from 20% to 6%. Is this because of increased digital banking? Or are financial companies waiting for economic stability before expanding? Would love to hear experts' views on this shift.

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