Corporate Leasing in India
India’s office market is poised for significant growth in 2025, building on the momentum from 2024. The country’s commercial real estate sector is set to continue expanding, with demand for Grade A office spaces and flexible work solutions rising.
The Indian office market saw strong leasing activity in 2024, with the top six cities reporting 47 million square feet of gross leasing by the third quarter, reflecting a 23% year-on-year growth. Bengaluru and Hyderabad are the leading markets, accounting for nearly half of this leasing activity. By the end of 2024, Grade A absorption is expected to surpass 60 million square feet, marking a new high for the market.
Tech companies continue to drive a significant portion of the leasing activity, although their demand has stabilized. These firms are expected to account for roughly 25% of total leasing activity in 2024. In addition, the demand for flexible office spaces (flex spaces) is on the rise, projected to account for nearly 20% of leasing activity across India’s top six cities in 2024.
The completion of 37.4 million square feet of new office space in 2024, mainly driven by Bengaluru and Hyderabad, indicates strong market growth. Overall, new supply is expected to exceed 50 million square feet by the end of 2024, with vacancy rates remaining stable. Rental growth is expected to range between 5% and 10% annually across most major cities.
India’s office market is expected to experience continued expansion in 2025, with a growing adoption of the “Core + Flex” model, which combines traditional office spaces with flexible lease options. This approach helps businesses meet the needs of hybrid work models and is likely to drive demand for flexible office solutions.
The market remains optimistic, with strong economic growth, favorable business conditions, and a rising demand for office space in India. Leasing activity is projected to continue its upward trend, with 60 million square feet of leasing activity becoming the new normal.
In 2025, the banking, financial services, and insurance (BFSI) sectors, as well as engineering and manufacturing, are expected to drive 35% to 40% of the demand for office space in India. Although tech companies’ leasing activity may stabilize, these companies are expected to continue adopting hybrid and distributed work models, making up around 25% to 30% of leasing activity.
Global Capability Centers (GCCs) are expected to play a key role in driving demand for Grade A office space, accounting for 40% to 50% of the total leasing activity in 2025. State governments are likely to implement policies similar to the Karnataka GCC policy, encouraging the growth of these centers. As GCCs expand, the demand for modern, high-quality office spaces will continue to grow. Smaller cities, such as Mysuru, Mangaluru, Hubli, and Dharwad, are expected to complement established GCC hubs like Bengaluru.
With the growing adoption of hybrid work strategies, businesses are increasingly opting for smaller office footprints. The average size of office deals fell to 43,000 square feet in 2023, down 11% compared to pre-pandemic levels. However, the number of office deals has risen by 43%. Mid-sized deals (50,000 to 99,999 square feet) are projected to gain momentum across Tier I cities in the coming years.
Smaller cities, such as Bhubaneswar, Chandigarh, Coimbatore, Indore, Jaipur, Kochi, and Thiruvananthapuram, are seeing increased demand for office space. These cities benefit from lower operating costs, an ample supply of skilled labor, and infrastructure improvements, making them attractive for businesses. Developers are expected to target these regions as they continue to expand their Grade A office space offerings.
Flex spaces, which offer businesses more adaptability and reduced operational costs, are now becoming a mainstream option. As companies continue to rethink their workplace strategies, flex spaces are expected to capture 20% of the overall office space demand in 2025.
Many leading flex space providers are adopting asset-heavy models, acquiring commercial properties rather than leasing them. These providers are expected to grow their portfolios and expand to Tier-II and Tier-III cities, where the demand for flexible office spaces is on the rise.
Sustainability is becoming increasingly important in India’s office market. Green-certified buildings are now a requirement for new developments, with LEED and GRIHA certifications becoming the standard. Nearly 80% of the office supply pipeline over the next two to three years is expected to feature green-certified office spaces.
Existing office buildings are also undergoing retrofitting processes to improve energy efficiency and meet sustainability standards. An estimated 95 to 110 million square feet of office space that is less than 10 years old is likely to undergo green certification with minimal capital expenditure over the next few years.
India’s office market is on a solid growth trajectory, with strong demand from a variety of sectors, including BFSI, engineering, and GCCs. The growing shift toward flexible and sustainable office spaces will continue to shape the market in 2025. As leasing activity increases, and rental rates rise, India’s office real estate sector remains a strong investment prospect in the coming years.
India’s office market is experiencing a notable shift, with domestic companies projected to lease 60-65 million square feet between 2024 and 2025, challenging the historical dominance of global corporations, particularly from the US, in leasing, according to a report by property consulting firm CBRE.
Domestic firms have seen a 60% increase in office space over the last two years compared with the pre-pandemic years of 2018-2019.
These firms have accounted for nearly 47% of overall office leasing activity in the last decade, with the National Capital Region leading the way, followed by Bengaluru and Mumbai.
As per the report, cities like Bengaluru and Hyderabad have seen increased occupancy by ecommerce and life sciences firms, respectively, reflecting their strong growth trajectories. In Mumbai, local banking, financial services and insurance companies accounted for much of the leasing. Domestic technology firms have also been expanding their office footprint.
“Domestic firms are demonstrating a strong commitment to growth and expansion, which is set to drive substantial office space absorption in the coming years. India’s rapidly expanding startup ecosystem and abundant talent are major drivers of this demand,” said Anshuman Magazine, chairman and chief executive, India, Southeast Asia, Middle East & Africa at CBRE.
The growth in the office market is supported by various factors, such as the Make in India push, PLI schemes, increased corporate profitability and a well-capitalised banking sector. A huge talent pool and its burgeoning startup ecosystem are fuelling the growth too.
Some of the firms that have leased office space recently include L&T Technology Services (leased 545,000 sq ft in Bengaluru), LTI Mindtree (1.2 million sq ft in Bengaluru and Chennai), and Smartworks (700,000 sq ft in Bengaluru).
India’s commercial real estate sector is set for another milestone as the demand for office space is projected to surpass the 50 million square feet mark for the third consecutive year in 2024, according to industry reports. A significant contributor to this surge is the anticipated expansion of Global Capability Centers (GCCs), which are expected to lease approximately 45-50 million square feet of Grade A office space by 2025. This forecast, outlined in a recent report by Colliers, signifies the key role of GCCs in India’s business market and their growing importance in driving demand for premium office spaces across the country.
GCCs are offshore subsidiaries or service centers established by multinational corporations to leverage India’s skilled workforce and cost-efficient business environment. These centers typically require Grade A office spaces, which offer modern amenities, prime locations, and superior infrastructure, making them ideal for housing GCC operations. The appeal of Grade A office spaces lies in their ability to provide conducive environments for collaboration, innovation, and productivity, essential for GCCs to thrive and expand their operations seamlessly.
Several factors are driving the rise of GCCs in India. Compared to developed economies, India offers significant cost advantages on operational expenses, talent acquisition, and infrastructure development. India boasts a vast pool of skilled professionals across diverse sectors, making it easier for GCCs to find the right talent pool to staff their operations. Commenting on the same, Aman Trehan, Executive Director, Trehan Iris, said, “The increase in demand for office space can be attributed to the positive economic outlook and improved business sentiment, which have instilled confidence within the market. As a result, GCCs have become essential in driving demand for commercial real estate and promoting economic development.
These Global Capability Centers hold significant importance in both the business and real estate sectors. A recent report by Colliers indicates that Global Capability Centers (GCCs) are likely to lease approximately 45-50 million square feet of office space within the next two years. Besides, the demand for office spaces in India is on the rise, particularly from companies that are looking to establish their capability centres in the country. Moreover, Delhi-NCR were the most preferred locations for commercial leasing and led the demand, accounting for nearly half of India’s total demand for office space last year.
The pivotal role played by GCCs is set to shape the commercial real estate landscape of India in the near future, making it an opportune time for investors to consider the potential benefits of investing in this sector.”The government’s focus on infrastructure development initiatives further strengthens this appeal. Improved connectivity through highways, air travel, metro expansion, and high-speed internet are all crucial factors for successful business operations. These initiatives play a vital role in making Indian cities more attractive options for GCC expansion.
Developers and investors are increasingly taking note of emerging micro-markets within established cities, recognizing the potential for high-quality office space catering specifically to GCCs. Delhi-NCR, for instance, is expected to see a strong pipeline of new developments catering to Grade A office space. Real estate developers and investors stand to benefit significantly from this growing demand. Building high-quality office spaces with a focus on sustainability and technology integration will cater to this specific clientele.
Ashish Sharma-AVP Operations, Brahma Group, said, “The demand for the office market in India is expected to perform well due to the increased activity from Global Capability Centers and sustained domestic demand. As a result, GCCs are playing a vital role in driving demand for commercial real estate and are expected to further boost office demand in the next 1-2 years. A recent report by Colliers indicates that there has been a 14% year-on-year increase in leasing activity in GCC in 2023, depicting a significant increase in the share of Grade A office space leased by domestic occupiers. However, there is a growing interest among occupiers from all sectors, which is expected to diversify the GCC landscape further.
Moreover, the demand for office space in Delhi-NCR has increased significantly, depicting the occupier’s confidence in India’s economic stability despite global uncertainties. Besides, the significant impact of GCCs is poised to reshape India’s commercial real estate sector, and is likely to fuel the demand for office spaces.” Besides, the surge in Global Capability Center office demand is reforming the commercial real estate business in the country. This trend is not only boosting office leasing activity but also driving overall office market dynamics in India.
The long-term implications of GCC growth on India’s economy are significant, as it strengthens the country’s position as a preferred destination for global outsourcing and business process management. Looking ahead, the outlook for GCCs remains promising, characterized by a blend of diversification, flexibility, and sustainability. As GCCs continue to expand their footprint in India, the projected demand for Grade A office space is expected to remain robust, further propelling the growth trajectory of India’s commercial real estate sector well into 2025 and beyond.
Chennai – November 27th, 2024 – CBRE South Asia Pvt. Ltd., India’s leading real estate consulting firm, today released a report titled, ‘Tamil Nadu: The Epicentre of Capability and Innovation Leadership’. The report highlights Chennai’s rising prominence as a key destination for Global Capability Centers (GCCs) and its expanding commercial real estate landscape. As per the report, it is projected that GCCs would lease ~3-3.2 mn. sq. ft. in 2025 in Chennai. Over the years, Chennai has solidified its position as a preferred hub for global corporates, which accounts for 11% of India’s current GCC talent. The city currently hosts 250+ GCC units, which is expected to reach around 450-460 units by 2030. Aligned to this growth, the GCC talent pool in Chennai is projected to grow by 1.4X, reaching 320-370k by 2030. This growth is underpinned by a diverse talent mix of experienced professionals and fresh graduates, further strengthened by the state government’s initiatives in workforce training and industry-academia collaboration.
Chennai’s robust infrastructure, proactive state government policies, and quality office development are aligned to meet the needs of global corporates. Between 2025 and 2026, the city is set to add 12–13 million sq. ft. of premium office space tailored to enhance employee experience and offer state-of-the-art amenities. Chennai is India’s fifth-largest office market, with 90+ million sq. ft. of office stock as of 2024 (YTD). As per the report, total office stock in the city is expected to surpass 100 mn. sq. ft. by 2026. Campus-style developments and sustainable design approaches make the city a magnet for businesses prioritizing employee well-being and environmental consciousness.
Chennai currently houses about 250 GCCs that employ 150,000+ professionals, contributing about 11% of India’s total GCC talent pool with notable ER&D capabilities. Strategic policies like the Tamil Nadu Startup and Innovation Policy 2023 and R&D Policy 2022 enhance its attractiveness, while the payroll subsidy program for newly established GCCs incentivizes high-paying jobs, drawing substantial global investments and solidifying the city’s role as a hub for innovation and talent.
Tamil Nadu – Strategic imperative for global businesses
Tamil Nadu’s vision of becoming a USD 1 trillion economy by 2030 is underpinned by its strong industrial base and expanding services sector, including Global Capability Centers (GCCs). Cities like Coimbatore, Madurai, and Tiruchirappalli are emerging as key hubs for manufacturing investments, providing significant opportunities for GCCs to drive innovation and product development. With a robust talent pool in manufacturing, software development, and mechanical engineering, GCCs in Tamil Nadu are poised to deliver niche and foundational expertise, contributing to the state’s economic growth. Initiatives in R&D, regulatory support, and workforce development further bolster sustainable growth prospects.
GCCs overview in Chennai
Chennai is ranked third in GCC leasing activity in India after Bengaluru and Hyderabad during the period from 2022-9M 2024. The city has witnessed GCC office absorption increasing from 1.4 million sq. ft. in 2022 to 2.3 mn. sq. ft. in the first nine months of 2024.
This growth is fuelled by strong demand from corporates belonging to sectors such as engineering and manufacturing (33%), BFSI (27%), and tech (13%). US firms accounted for 67% of GCC setups between 2022 and 9M 2024. During the same time period, key micro-markets in Chennai viz., OMR Zone 1, MPH Road, and PT Road, cumulatively contributed to 92% of the overall city GCC leasing, cementing Chennai’s position as a global hub for corporate growth.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “As the world embraces digital transformation, Global Capability Centers (GCCs) have emerged as strategic drivers of India’s exponential growth. Initially attracted by cost advantages, GCCs in India now leverage the country’s deep pool of skilled talent and vibrant startup ecosystem.
Tamil Nadu presents a compelling proposition for businesses seeking to establish or expand their global operations. The state, with its attractive policy incentives, strong talent pool, robust corporate ecosystem, and abundant quality office space, has solidified its position as a preferred destination for these GCCs. Tamil Nadu currently hosts over 250 GCCs, contributing substantially to India’s GDP.”
Ram Chandnani, Managing Director, Advisory & Transaction Services, CBRE India, said, “Chennai is a vibrant metropolis with a rich cultural heritage and a thriving economy. The city’s strategic location and excellent connectivity have made it a preferred business destination, furthering economic development.
To foster investment and job creation, the Tamil Nadu government has proactively initiated policies across sectors. The government recently announced GCC-specific policies which would aid the growth of such facilities in the state. Additionally, the state’s policies on fintech, R&D, startups, and semiconductors offer attractive incentives, further enhancing its appeal as a destination for established and emerging firms.”
The convergence of talent availability and robust infrastructure is propelling businesses to establish GCCs in Tamil Nadu’s emerging and developing cities. Government investments in education and training initiatives further bolster the state’s capacity to meet the evolving demands of the modern economy. Coimbatore, Madurai and Tiruchirappalli are emerging cities in Tamil Nadu in the GCC space.
