Kolkata's Office Leasing Volumes Hit Decade-High in H1 2025
Kolkata's commercial real estate market has seen an unexpected boom in office leasing activity during the first half of 2025. The city has reclaimed its status as a vibrant hub for office demand, with fresh leases topping 1.1 million square feet. This marks a 60% year-on-year increase in leasing volumes.
What Drove the Burst in Leasing?
This remarkable jump was driven primarily by two key factors:
- A landmark 0.3 million sq ft IT outsourcing agreement which fueled a sizable chunk of the leasing volume.
- Flexible workspace deals aggregating to about 0.1 million sq ft, reflecting evolving preferences for agile office environments.
These strategic transactions boosted sector confidence and highlighted Kolkata's rising appeal among technology-driven and flexible office tenants.
Peripheral Business Districts Dominate Demand
A significant feature of this surge has been the dominance of Peripheral Business Districts (PBDs) in leasing activity. Salt Lake City, comprising PBD-1, accounted for a commanding 50% of all deals, while Rajarhat New Town, or PBD-2, contributed another 43%. This geographic concentration underscores the preference for well-developed peripheral zones that offer modern infrastructure and connectivity advantages.
Vacancy Rates Hit Lowest Levels Since 2019
The surge in leases has dramatically tightened the office market:
- Vacancy rates have dropped to 33.5%, the lowest since the second half of 2019.
- New supply remains constrained, with only around 0.2 million sq ft expected by the end of 2025, adding further pressure on availability.
This evolving supply-demand balance is pivotal in fueling rental growth and intensifying competition among occupiers.
Rental Growth Reflects Market Strength
In response to strong leasing momentum and tightened vacancies, office rentals in Kolkata rose by approximately 10% during H1 2025. This upward push in rents signals enhanced market fundamentals and growing landlord confidence, translating into better returns for commercial property owners.
Outlook: A Market on the Rise
Kolkata’s commercial real estate sector is demonstrating renewed vigor, driven by large-scale IT outsourcing transactions and the rising traction of flexible workspaces. With Salt Lake City and Rajarhat New Town solidifying their status as prime office destinations, peripheral business hubs will continue to attract occupiers seeking cost-efficient yet well-connected office environments.
While supply additions remain limited in the near term, sustained demand growth coupled with shrinking vacancies is likely to keep rental trends buoyant. Businesses and developers alike should anticipate a competitive leasing environment moving forward.
Key Takeaways
- Leasing volume jumped 60% YoY to 1.1 million sq ft
- IT outsourcing deal of 0.3 million sq ft spurred growth
- Flexible workspace leases accounted for 0.1 million sq ft
- Peripheral Business Districts accounted for 93% of transactions
- Vacancy rate dropped to its lowest
- Rental demand increased by 10% in the first half of 2025
Kolkata’s office sector is clearly on a decade-high trajectory, propelled by strategic occupier demand and compelling market fundamentals reshaping the commercial real estate landscape.