During the first quarter of FY25, India saw significant traction in global capability centre (GCC) leasing, with 5 million square feet leased, making up 37 per cent of total office leasing in the top six cities. Looking ahead, GCCs are projected to lease 45-50 million square feet of office space in the next two years, constituting around 40 per cent of total demand.
Heightened GCC activity is driven by diverse occupiers across sectors like banking, financial services, and insurance (BFSI), technology, engineering and manufacturing, and healthcare. There is also a consistent preference for green-certified Grade A office spaces. Sub- and near-dollar micro-markets remain pivotal for GCC space uptake in India, contributing nearly 80 per cent of the leasing activity from 2019 to 2023.
“India’s ascent as a premier GCC hub in the Asia-Pacific (APAC) region underscores its unmatched value proposition for global corporations. In the next three years, the projected leasing of 45-50 million square feet of office space by GCCs is poised to further solidify India’s position, driving over 40 per cent of the country’s office leasing activity. Fuelled by a robust talent pool, strategic location, and a steadfast commitment to sustainability, India remains a beacon for diverse occupiers aiming to foster innovation and fuel growth,” said Vimal Nadar, senior director and head of research, Colliers India.
India's prime office markets saw a 4-8 per cent year-on-year rise in rentals in the first quarter, propelled by strong demand and an influx of high-quality supply, according to Colliers’ latest report titled “Expert Insights - Asia Pacific Office Markets April 2024”.
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Despite a pandemic-induced downturn with subdued demand and remote work trends, 2024 witnessed remarkable rental growth, surpassing pre-pandemic levels. This resurgence reflects robust economic growth and renewed occupier confidence, driving India's thriving office market.
“In response to evolving market dynamics, office occupiers in India are revolutionising their cost-optimisation strategies by embracing a hub-and-spoke model, expanding flexible space portfolios, and leveraging technology. Suburban and peripheral areas, offering affordability, are witnessing heightened demand, indicating a preference for sub-dollar or near-dollar markets,” said Arpit Mehrotra, managing director, office services, India, Colliers.
The rental uptick underscores occupiers' willingness to pay a premium for buildings with modern amenities and green certifications in strategic locations. New office spaces, distinguished by superior construction and upscale amenities, command rents up to 20 per cent higher than average rates in select premium micro-markets.
“Flexible spaces, especially with the rise of core-plus-flex models, are gaining prominence. At 8.7 million square feet of leasing in 2023 and the highest ever space takeup by flex spaces, the segment has witnessed remarkable expansion in recent years. Flex spaces are likely to continue the momentum in 2024 and are expected to constitute 15-20 per cent of total office leasing across the top six cities, underscoring occupiers’ pursuit of agile, cost-effective solutions to meet their evolving workspace needs,” added Mehrotra.
The Colliers report highlighted six priorities to achieve cost efficiency in office real estate: aligning office strategy to business goals, portfolio strategy, maximising lease negotiations, data-driven space utilisation, prioritising energy-efficient systems and upgrades, and driving employee engagement and satisfaction.