Absorption of real estate space by GCCs crosses pre-pandemic level

Trend driven by stricter policies on working remotely

Real estate absorption in India by global capability centres (GCCs) has surpassed pre-pandemic levels, which has been driven by stricter policies on moving away from working remotely and returning to office, a surge in hiring in the last two years, and expansion plans.

 

GCCs have leased or committed themselves to taking about 27.7 million square feet (sq ft) of grade A commercial real estate in 2024 and 24.1 million sq ft in 2023, which represented 36 per cent and 38 per cent of overall absorption, respectively, according to the data sourced from real estate consultant JLL.

 

In comparison, the space absorbed in 2019 and 2020 was 18.5 million sq ft and 23.8 million sq ft, respectively. This represents an absorption rate of 31.4 per cent and almost 57 per cent in 2019 and 2020, respectively.

 

“The pendulum has swung a bit to the other side when it comes to hybrid working policies,” said Arindam Sen, partner and GCC sector lead-TMT, EY India. “If you look at the largest workplaces, there are very few teams that remain remote. Most companies want them to come back and have established rules around it. While the hybrid option is there, there is more emphasis on working in office than being fully remote,” Mukherjee added.

 

More and more companies have asked their employees to be present in office at least three days a week, with some stretching it to even five days. 

 

JP Morgan, along with other global banks, has mandated a five-day office policy. So has Amazon.

 

“One-to-one interaction in office accelerates decision-making, boosts engagement, and fosters stronger connections among teams. While working from home offers flexibility, the benefits of face-to-face interaction are undeniable,” said a human resources manager of an American GCC that is in retail operations.

 

India has about 1,800 GCCs across verticals such as banking, financial services and insurance (BFSI); retail; health care; aerospace; and oil and gas, according to a recent report by Nasscom, a body that represents the information technology (IT) industry.

 

Those centres are expected to contribute about $112 billion as IT export in 2024-25. Additionally, 120 GCCs set up shop in India over the past 30 months and have hired 41,000 full-time employees. Within GCCs, the space taken up was led by manufacturing and industrial centres at 24 per cent, followed by BFSI centres at 19.6 per cent.

 

Companies are making provisions for a higher workspace. Traditionally, it was about 100 sq ft but that has gone up 20-30 per cent as companies look for more collaborative workspaces, according to Rahul Arora, senior managing director, JLL.

 

The centres have been hiring engineers with specialised skills. They took in nearly 140,000 of them this financial year, up from about 60,000 in FY24. In FY26, the number is expected to be 180,000 with about 100 GCCs expected to start operations in India, according to the data from specialised staffing firm Xpheno.

 

“To mitigate the future increase in real estate prices, GCCs are also taking additional space for expansion in the subsequent years,” said Kamal Karanth, cofounder, Xpheno.