IT, flex spaces drive Kolkata office leasing to 65% jump in Q3

Kolkata: Kolkata’s office market witnessed robust growth in the third quarter (Q3) of 2025, led by the IT sector and flexible workspace operators, according to real estate consultancy Cushman & Wakefield’s latest report.

The city recorded gross leasing volumes of 0.67 million sq ft, marking a 29 per cent rise quarter-on-quarter and a 65 per cent jump year-on-year. Net absorption stood at 0.43 million sq ft, up 7 per cent sequentially and 14 per cent annually.

Fresh leasing accounted for nearly 70 per cent of all transactions, with the IT-BPM sector driving 57 per cent of quarterly demand. Flexible workspace operators contributed 22 per cent, while engineering and manufacturing firms accounted for 7per cent. The city’s prime business hubs, Sector V and Rajarhat, together made up about 94 per cent of total leasing activity.

On a year-to-date basis, gross leasing reached 1.46 million sq ft, up 3per cent over the same period last year, while net absorption at 1.21 million sq ft reflected a 4per cent decline year-on-year. IT-BPM firms continued to dominate with 53per cent of YTD leasing, followed by flex operators (13 per cent) and engineering and manufacturing (12 per cent).

No new supply entered the market in Q3, and overall additions for 2025 are expected to remain low at 0.17 million sq ft. The 2026 pipeline, however, looks healthy with around 1.36 million sq ft under construction or planned. Sustained demand amid limited supply pushed the city-wide vacancy rate down 160 basis points to 14.8 per cent.

Average Grade-A rents remained stable at Rs 52.5 per sq ft per month, with submarket averages of Rs 110.1 in the CBD, Rs 53 in Sector V, and Rs 47 in Rajarhat. Major transactions included a 200,000-sq-ft renewal by IBM in Rajarhat and fresh leases by Tata Consumer Products and SREI. Kolkata’s Grade-A office inventory stands at 27.59 million sq ft, with 4.03 million sq ft under development.

According to Sushil Mohta, president of CREDAI West Bengal and chairman of Merlin Group, the city’s office segment began recovering in 2024. “There is practically no vacant space in any Grade-A building,” he said. “But rents and sale prices remain low — still in the four-digit range — making commercial projects less viable given higher construction and land costs. Developers are preferring residential projects. I’m confident that next year, prices will cross Rs 10,000 per sq ft, giving developers better margins.”