Synopsis
According to a recent report, the demand for office spaces in India's leading cities is expected to surge significantly by 2025, with gross leasing projected to reach 65-70 million square feet. Key sectors like engineering, BFSI, and flex spaces will drive this growth.Key Takeaways
- Projected office leasing in India’s top cities to reach 65-70 million sq ft by 2025.
- Demand from engineering, BFSI, and flex space operators expected to grow by 10-15%.
- Bengaluru to account for one-third of overall demand in 2025.
- Hyderabad and Delhi NCR to see 10-15 million sq ft of leasing each.
- Focus on sustainable development and energy efficiency in commercial real estate.
New Delhi, Feb 11 (NationPress) The demand for office spaces in India’s major cities is set to see a notable increase, with gross leasing in the top six cities expected to hit 65-70 million square feet by 2025, according to a recent report. This surge is fueled by strong demand from sectors such as engineering, manufacturing, BFSI, and flex space operators, which are anticipated to grow by 10-15 percent in 2025.
Bengaluru is projected to represent about one-third of total office space demand, primarily driven by the uptake of space from GCCs, engineering firms, and flex space operators.
While Bengaluru will maintain a significant lead in office demand, Hyderabad and Delhi NCR are expected to see increased activity, with each city estimated to record 10-15 million sq ft of leasing, reflecting a 5-10 percent rise from the previous year.
Mumbai, Chennai, and Pune will continue to attract occupiers from the BFSI and engineering sectors, as well as flex space operators, with each city likely to witness 5-10 million sq ft of Grade A office space demand in 2025, as stated by Arpit Mehrotra, Managing Director of Office Services at Colliers India.
The report, titled ‘India Office: Setting New Standards for 2025’, was released during the FICCI '18th Real Estate summit' and reflects a positive business sentiment while excluding the potential impact of external disruptions.
The anticipated growth in leasing volume is attributed to a broader occupier base, the continued expansion of Global Capability Centers (GCCs), and domestic business optimism. The office market is evolving from being supply-driven to becoming more focused on occupier needs, marking a new phase in India's commercial real estate.
Developers are adapting to this shift by creating office spaces that cater to changing tenant requirements. A total of 60-65 million sq ft of new supply is expected in 2025, with an increasing focus on energy efficiency and sustainable practices set to redefine standards in Indian commercial real estate.
Engineering and manufacturing, BFSI, and flex space operators are projected to lead office space demand in 2025, with each sector expecting a 10-15 percent annual growth in space utilization. Collectively, these sectors are expected to comprise half of the leasing activity. The engineering and manufacturing sector is set to experience substantial growth across key office markets, with Bengaluru likely to dominate leasing volumes.
While BFSI firms are expected to maintain a strong presence in Mumbai, there is a noticeable trend towards diversification in Bengaluru, Hyderabad, and Pune. Furthermore, flex space operators are anticipated to emerge as key demand drivers, accounting for nearly 20 percent of total leasing activity in 2025.
The report indicates that GCC leasing experienced a 41 percent year-over-year increase in 2024, reaching 25.7 million sq ft across the top six cities. This demand is expected to rise further, approaching 30 million sq ft and representing about 40 percent of total office space demand in 2025.
Bengaluru and Hyderabad are projected to remain leading hubs for knowledge and innovation-driven GCCs. Consistent with historical trends, US-based companies are likely to drive GCC expansion across various markets, contributing approximately 70 percent of demand in 2025, primarily from the technology, BFSI, and engineering sectors.
With the rise of REITs in India, spurred by increasing retail investor engagement and a supportive regulatory environment, developers are concentrating on building high-quality real estate portfolios. Concurrently, the rising demand for sustainable, green-certified developments can accelerate progress toward national carbon reduction and net-zero objectives. The incorporation of sustainable practices and low-carbon construction materials in commercial real estate is expected to expedite the transition to a green economy.
