Bengaluru Office Market Q3 2025: Vacancy, Rentals, Absorption, New Supply, Key Deals, and What It Means for Tenants and Investors

With single-digit to low-teens vacancy, firming rentals, schedule absorption, and substantial new supply coming up from GCCs, tech, and flex operators, the office market in Bengaluru remains among the tightest and most dynamic in the country. This means less negotiation leverage for tenants in prime micro markets while investors continue to benefit from robust leasing momentum and visibility of rental growth.

Big picture: how the quarter looked

In 2025, Bengaluru solidified its position as India's number one office market with a record gross leasing volume and net absorption above supply year‑to‑date. By Q3 2025 itself, the city had already absorbed almost around 14.8–15.2 million sq. ft of office space, and by the end of the year, demand is estimated to be around 18–19 million sq. ft-the measure was a clear indicator of deep occupier demand.

On the supplies front, Bengaluru completed approximately 10.5–12.2 million sq. ft of new completions until the third quarter of 2025, which puts this on track for hitting close to 15–16 million sq. ft of new Grade A stock for the complete year. Despite this weighty supply growth, the vacancy continues to tighten further because net absorption has always outstripped the new supply during FY2025 and early into FY2026.

Vacancy: tight, and tightening further

Current grade A vacancy in Bangalore city stands at a low double-digit vacancy figure and some recent quarter data suggests an approximate vacancy level of 9 percent to 11 percent, depending on the basket and methodology used. One major tracking agency reported office vacancy levels of 11.2 percent in Q3 2025, about 80 bps quarter-on-quarter low while another projected occupancy of 90.8 percent (i.e., 9.2 percent vacancy) by September 2025.

This tightening is linked to the three structural forces which feature pre-commitments in future Grade A projects, continuous growth by Global Capability Centers (GCCs), and sustained interest from technology and BFSI occupiers. Adding another layer to the fray are flex and managed office players who are backfilling older stock and quickly occupying fitted-out space, thereby keeping 'functional' vacancy still lower in the prime corridors such as Outer Ring Road (ORR) and specific SBD clusters.

Rentals: firming with clear upward bias

Headline rentals in Bengaluru's major office corridors have increased in 2025. With one pan India office tracker indicating rental growth of nearly 8 percent year-on-year largely driven by premium new completions priced over prevailing market levels, Bengaluru rents are expected to rise this year to about 4-4.5 percent towards 2026 with sustained demand and largely disciplined supply.  

Most favorable rental traction is in low-vacancy micro-markets like prime ORR stretches, SBD City, and high-spec campus-type parks with strong ESG credentials. Landlords' confidence has also increased after a series of high-value leases executed by blue-chip occupiers, which set new benchmarks for effective rents and escalation structures in Grade A parks.

Absorption: record‑high leasing volumes

The absorption levels in leasing volumes at Bengaluru has been phenomenal for 2025, with a number of reports having shown record absorption during the initial three quarters. One such global advisory firm estimates that the gross leasing figure for Q3 2025 alone stands at nearly 3.03 million sq ft, thereby pushing the gross leasing volume for January-September 2025 to a record 14.8 million sq ft with net absorption increasing over 30 percent year-on-year.

Earlier this year, another study showed that Q1 2025 was an exceptional 12.7 million sq ft of office transactions, which is more than 45 percent of office transactions in India's top office markets. It is estimated that Bengaluru consumed around 18.2 million sq ft of office space in the first half of 2025, largely led by GCCs, contributing more than half of the transacted amount.

New supply: strong pipeline but largely matched by demand

New-comers in terms of office supply in Bengaluru have seen heavy absorption, though it is equally important to note that it is being absorbed fast. According to varying estimates in terms of trackers, Q3 2025 completions are put at 2.3-3.6 million sq ft against total supply in the current financial year of approximately 10.5-12.2 million sq ft, and full-year forecasts for the year 2025 are 15-16 million sq ft. 

This new stock is concentrated in the SBD and ORR submarkets, with Whitefield and certain locations in North Bengaluru being favored, all of which signify a preference for large, campus-style, Grade A developments connected via strong infrastructure. A healthy share of the under-construction stock is already pre-committed to a great extent, thus reducing the risk of abrupt vacancy spikes despite the eventual completion of these projects in 12-18 months' time.

Major recent deals and who is taking space

In 2025, the Bengaluru leasing portfolio comprises a mixture of mega new leases and large renewals by global and domestic giants. Demand is broad-based with tech, GCCs, and BFSI contributing to a majority of the take-up, with flex operators acting as a demand multiplier across many submarkets. Some recent noteworthy transactions include a landmark lease of about 1,752,000 sq ft by TCS at Sattva Knowledge Point in Bengaluru, estimated at ₹975 crore over five years. Other big-ticket transactions and renewals encompass Amazon (677,000 sq ft), Honeywell (589,000 sq ft), and Synopsys (430,000 sq ft), securing good Grade A space in prime business parks with good infrastructure and amenities.

Demand drivers: GCCs, tech and flex

Considering its magnitude and various forms, the Global Capability Centre remains the single-largest driver of office space demand in Bengaluru, accounting for nearly 55 percent of leasing volumes in H1 2025. These occupiers are now deepening their presence in India, not only in core IT services but also in higher-value functions such as engineering R&D, design, risk, and analytics, which generally operate out of high-quality, large-plate offices with resilient infrastructure. 

Traditional technology companies and BFSI firms are also on an expansion spree, usually consolidating multiple smaller offices into a bigger, more efficient campus to enhance collaboration and space utilization. The flex and managed office operators continue to scale up on the back of hybrid work models and the enterprise demand for plug-and-play solutions, especially in prime corridors where direct space is either limited or capex-heavy.

What this means for tenants

The current market is very lightly tilted in favor of landlords in primary Grade A micro-markets but is mostly flat and likely tenant-friendly in fringe or emerging locations. Consequently, there will be almost zero vacancies in the ideal corridors; for that reason, larger, contiguous blocks of space will require 12 to 18 months of forward real estate strategy planning by a tenant, usually via pre-commitment for buildings to come on-stream rather than move-in-ready space.

This implies that tenants have to allocate budget resources for escalations, and in some cases, could potentially spend relatively more money on fitout costs in newer ESG-compliant buildings. However, the sheer volume of supply across the city enables premium portfolio optimization strategies, continuum end-user journeys such as hub-and-spoke model, flight-to-quality moves into rationalized more efficient buildings, and partial relocations into flex spaces to take otherwise non-physical people, or project-based teams, during peak headcount periods.

What this means for investors and developers

For institutional investors, strong absorption, stable to increasing rentals, and declining vacancies all support the investment thesis for Bengaluru-specific office portfolios. Many Grade A projects have high pre-commitments, which provide assurance against lease risks, while the continuous growth of GCCs and tech gives visibility of long-term demand for core and value-add strategies.

Developers with well-located, transit-oriented land banks and the ability to create top-spec, ESG-compliant campuses are very well set to reap benefits from this growth cycle. There is already a discernible premium for assets that offer a combination of strong sustainability credentials, wellness-focused design, and integrated amenities, indicating that the compression of cap rates is more likely to favour “next-gen” Grade A properties in the future.

Strategic takeaways for the next 12–18 months

The major tactical moves for tenants are pulling in the decision timelines, locking down space early in under-construction assets, and giving themselves portfolio flexibility that may come in handy against rising rents in prime areas. Negotiating elements like expansion rights, step-up options, and sharing fit-out cost with the landlord will pave the way for certainty concerning costs and future growth needs. 

The 2025 numbers back a clear message to the investors and developers: this remains the most liquid and resilient office market in India, with demand almost always ahead of or matching supply. Capital deployed in well-located Grade A offices, particularly those targeting GCCs and tech-enabled occupiers, would benefit over the medium term from sustained occupancy, predictable rental growth, and strong exit prospects.

Frequently Asked Questions (FAQs)

1. What was the vacancy rate in Bengaluru's office market during Q3 2025?

   Citywide Grade A vacancy hovered around 9-11%, tightening by about 80 basis points quarter-on-quarter due to strong absorption outpacing supply.​

2. How did office rentals perform in Q3 2025?

   Rentals saw 4-8% year-on-year growth, with premium ORR and SBD corridors leading due to high demand for ESG-compliant Grade A spaces.​

3. What was the net absorption volume for Q3 2025?

   Net absorption reached record levels, with year-to-date figures at 14.8-15.2 million sq ft by September, driven by GCCs and tech firms.​

4. How much new office supply was added in Q3 2025?

   Around 2.3-3.6 million sq ft of new completions were delivered, contributing to a year-to-date total of 10.5-12.2 million sq ft.​

5. Who were the key players in major leasing deals during 2025?

   Standout deals included TCS leasing 1.75 million sq ft at Sattva Knowledge Point, plus large transactions by Amazon, Honeywell, and Synopsys.​

6. What drove office demand in Bengaluru Q3 2025?

   GCCs accounted for over 50% of leasing, alongside tech, BFSI expansions, and flex operators filling hybrid workspace needs.​

7. How does low vacancy impact tenants right now?

   Tenants face reduced leverage in prime markets, needing 12-18 month planning for pre-commitments and budgeting for 4-8% rental escalations.​

8. What opportunities exist for investors in this market?

   Strong leasing momentum, rising rents, and pre-committed supply support core and value-add strategies in transit-oriented Grade A assets.​

9. Will vacancy rates rise with upcoming supply?

   No, low-teens vacancy is forecast to persist through FY2027 as absorption matches or exceeds new deliveries.​

10. What are the top micro-markets for office leasing?

    ORR, SBD City, Whitefield, and North Bengaluru dominate, favored for connectivity, campuses, and amenities.