India’s office market started 2022 on a strong note as occupiers accelerated expansion plans and companies prepared employees for a gradual return to workplaces. Rising hiring activity across IT firms and startups pushed office demand higher, while developers increased new supply to match the recovery momentum.
According to the CRE Matrix India Office Q1 CY’22 report, pan-India office demand reached 11.9 million sq. ft. during the quarter, marking a 16% year-on-year increase. Supply also rose sharply to 12.1 million sq. ft., up 20% compared to the previous quarter.
Office Demand Crosses Pre-Pandemic Averages
India’s office leasing activity continued to outperform its 10-quarter average in Q1 CY’22. The report highlighted that companies increasingly recognized the limitations of long-term work-from-home models and resumed investments in physical office infrastructure.
Pan-India Grade A office stock stood at 654 million sq. ft., while overall vacancy remained at 16.4%. Average market rents also remained resilient at ₹88 per sq. ft. per month.
Bengaluru and Pune emerged as the biggest contributors to leasing activity. Together, both cities accounted for 41% of total office demand and 47% of total supply during the quarter.
IT Sector Continues to Drive Leasing Activity
Technology occupiers remained the biggest demand drivers across India’s office markets. Record hiring by IT and startup firms supported expansion plans in major office hubs such as Bengaluru, Hyderabad, Pune, and Chennai.
The report also highlighted the growing role of coworking operators, particularly in Pune, where flexible workspace demand and supply surged significantly during the quarter.
Sector-wise, IT/ITeS companies contributed 15% to total office demand in Q1 CY’22, while commercial and professional services contributed 10%. Co-working operators accounted for 7% of total leasing activity.
Bengaluru Maintains Leadership Position
Bengaluru recorded 2.4 million sq. ft. of office demand and 2.8 million sq. ft. of new supply in Q1 CY’22. The city maintained one of the lowest vacancy levels among major markets at 8.5%.
IT/ITeS occupiers accounted for 50% of Bengaluru’s leasing activity, reinforcing the city’s dominance as India’s largest technology office market. Major transactions included Shell India Marketing leasing over 229,000 sq. ft. at Bagmane Solarium City Business Park and Tekion India taking more than 109,000 sq. ft. in the same development.
Mumbai Office Market Sees Vacancy Stabilization
The Mumbai Metropolitan Region (MMR) recorded 1.9 million sq. ft. of office demand during the quarter, while new supply remained limited at 0.7 million sq. ft.
Vacancy in MMR declined slightly to 21.9%, indicating early signs of stabilization after prolonged pandemic-related pressure. Average market rents in Mumbai remained among the highest in India at ₹127 per sq. ft. per month.
BFSI firms led leasing activity in Mumbai with a 25% share of total demand. Major office transactions included Sporta Technologies leasing over 105,000 sq. ft. at One BKC.
Hyderabad and Pune Continue Strong Growth Momentum
Hyderabad recorded 2 million sq. ft. of office demand and 2.2 million sq. ft. of supply in Q1 CY’22. IT/ITeS occupiers contributed 51% of total leasing activity in the city.
Pune also witnessed strong momentum with office demand reaching 2.3 million sq. ft., supported by growing coworking and technology demand. Vacancy in Pune remained below 10% at 9.7%, one of the healthiest levels among India’s major office markets.
The report noted that coworking operators continued to expand aggressively in Pune as occupiers increasingly adopted flexible workplace strategies.
NCR and Chennai Witness Supply Expansion
NCR recorded 1.9 million sq. ft. of demand and 1.2 million sq. ft. of supply during the quarter. Vacancy levels remained elevated at 24.2%, although demand increased 40% year-on-year.
Chennai witnessed one of the sharpest increases in supply, with new completions rising 259% quarter-on-quarter to 2.5 million sq. ft. The city recorded 1.4 million sq. ft. of demand during Q1 CY’22.
Outlook Remains Positive for India’s Office Market
CRE Matrix expects office demand to remain strong over the coming quarters as more companies bring employees back to workplaces and large occupiers continue consolidating operations into high-quality office campuses.
The report also highlighted that India’s competitive rentals, growing talent pool, and strong pipeline of active leasing requirements could support the next phase of office market recovery. Developers, meanwhile, are prioritizing projects with high pre-commitments as confidence gradually returns across the commercial real estate sector.
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