India’s commercial office market is poised for another year of robust growth, with absorption expected to reach 65-70 million sq ft in 2025. The market achieved a record 66.4 million sq ft absorption in 2024, reflecting a 14% year-on-year growth. Vacancy levels are projected to decline to 15-16% in 2025, while average rental values are forecast to rise to Rs. 100-110 per sq ft per month.
A significant shift is occurring from a supply-driven market to one led by occupier demand, with leasing volumes consistently exceeding 50 million sq ft annually over the past three years. Bengaluru recorded the highest-ever absorption of 21.7 million sq ft in 2024, while Hyderabad registered the strongest growth at 55%.
The technology sector’s traditional dominance has declined, contributing just 25% of total leasing in 2024, down from 40-50% in previous years. Engineering and manufacturing firms, banking and financial services, and flexible workspace operators now account for over half of Grade A office space uptake. Global Capability Centres (GCCs) have become a key driver, with leasing surging 41% year-on-year to 25.7 million sq ft. Bengaluru captured 47% of GCC leasing, while Mumbai recorded a fourfold increase in GCC demand compared to 2023.
Office leasing is expected to grow another 8-10% in FY26, driven primarily by GCCs and the financial services sector. Notably, over 70% of leasing in 2024 was concentrated in green-certified buildings, a trend expected to rise to 80-85% by 2025. Nearly 80% of new supply in the next 2-3 years will be green-certified.
Institutional investments also remained strong, with inflows of $4.7 billion in the first nine months of 2024, more than 60% of which went into industrial, warehousing, and residential assets. Companies offering scalable, sustainable Grade A++ properties are in high demand, with GCCs, technology firms, and managed office space providers driving momentum in the sector.
Sustained growth will require a focus on execution and talent development, with increasing demand for both white-collar and blue-collar jobs. Developer attention to labour strategy and talent management will be critical for ensuring the industry’s continued expansion.