Ageing CBD offices emerge as next growth play for developers, investors

With land scarce in CBDs and demand for grade A offices strong, developers, investors are increasingly redeveloping ageing office stock to unlock value, improve sustainability, boost long-term returns

Office redevelopment is emerging as a key growth frontier for developers as India’s commercial real estate market shifts towards quality, sustainability, and capital efficiency. With land parcels scarce in central business districts (CBDs) and demand for Grade A offices remaining strong, developers and investors are increasingly turning to ageing office stock in prime locations to unlock value. 

Across top cities, a large share of office buildings in CBDs and established business districts were built two to three decades ago. While demand for these locations remains intact, many such buildings no longer meet occupier expectations in terms of floor efficiency, sustainability, technology integration, parking, or employee wellness. Redevelopment, industry experts say, is becoming the natural response to this mismatch between supply and demand. 

“Office redevelopment is an interesting opportunity because many buildings were strata-sold and not maintained well. There is clear potential to redevelop such assets, and the right players will look at it,” said Kshitij Bahri, senior general manager and head of commercial leasing at Oberoi Realty. While the company is currently focused on its own land parcels, Bahri said its business development team is evaluating select redevelopment proposals. 

The opportunity is sizeable. 

According to Knight Frank India, the Indian office market was valued at ₹16.07 trillion as of the first half (H1) of 2025. Of this, around 43 per cent of office stock falls in the Grade B category, while another 4 per cent is classified as Grade C. 

As of H1 2025, India had about 99 million square feet (msf) of Grade B office stock in CBDs valued at ₹1.34 trillion, and 157 msf worth ₹1.58 trillion in secondary business districts (SBDs). CBDs also accounted for 25 msf of Grade C stock valued at ₹34,100 crore, while SBDs had 17 msf worth ₹17,000 crore. In all, India’s Grade B and C office stock stood at about 298 msf, valued at ₹3.42 trillion. 

The redevelopment trend is being reinforced by a strong flight to quality among occupiers. Rajat Rastogi, chief executive officer (CEO), West region and commercial assets (pan-Indian) at Puravankara, said older office stock is increasingly misaligned with occupier expectations around sustainability, wellness, and technology. “Redeveloping well-located assets has become a strategic lever to enhance rentals, occupancy, and long-term asset performance,” he said, adding that redevelopment offers faster market readiness and better capital efficiency in land-constrained locations. 

Consultants say redevelopment activity is gaining traction on the ground. Anuj Puri, chairperson, Anarock group, said most office stock in core CBDs and older business districts such as Connaught Place in Delhi or Udyog Vihar in Gurugram was built decades ago and no longer matches current requirements. In Mumbai, older buildings in Nariman Point, Bandra-Kurla Complex, and parts of the western suburbs are being upgraded or repositioned to meet Grade A standards. 

A key economic driver behind redevelopment, particularly in Mumbai, is a higher floor space index (FSI). Older buildings were typically constructed with FSI limits of 1.2–2, compared with current permissible levels of 3.5–5 in many CBDs. This allows developers to increase built-up area by 2.5–3x without acquiring additional land. Incentive FSI, often 50-70 per cent additional area, helps offset demolition and reconstruction costs, improving project viability. 

For institutional owners and real estate investment trusts (Reits), redevelopment is also emerging as a portfolio strategy. Ramesh Nair, CEO and managing director of Mindspace Business Parks Reit, said redevelopment has strong potential in mature business districts where assets built 15–20 years ago need repositioning. Mindspace’s recent demolition of two 18-year-old office buildings at its Madhapur campus in Hyderabad to develop a 1.6 msf sustainable office project highlights the value-unlocking potential of such strategies. 

Global real estate consultancy CBRE echoed this view. 

Anshuman Magazine, chairperson and CEO, India, Southeast Asia, Middle East, and Africa at CBRE, said India’s office market is booming, with 2025 likely to mark an all-time high in leasing. “Demand for Grade A offices continues to outpace supply. Redevelopment is no longer optional but a strategic necessity, especially in CBDs,” he said. 

With prime office rentals ranging from ₹569 to ₹1,090 per square foot per month, redeveloped assets can deliver stronger long-term returns than greenfield projects, experts said. 

Old offices, new arithmetic

• Nearly half of India’s office stock — 298 msf worth ₹3.42 trillion — is Grade B or C, presenting massive redevelopment opportunity
• Higher FSI (3.5-5 vs 1.2-2) allows 2.5-3x more builtup area, making CBD upgrades commercially viable
• Prime rentals (₹569-1,090/sq ft/month) make redeveloped offices deliver stronger, steadier returns than greenfield builds