India’s office space market is poised for significant growth, driven largely by Global Capability Centres (GCCs). According to a recent report by Colliers, GCCs are expected to account for nearly 40% of the demand for Grade A office spaces over the next two to three years. As GCCs transform into knowledge and innovation hubs, their need for high-quality office space is rising, contributing to the ongoing shift in the country’s commercial real estate landscape.

Colliers’ report, “The Multifaceted Occupier Landscape of India Office Market,” unveiled at the RICS CRE FM conference, highlighted the evolving demand for office space. Where technology companies once dominated, a wider variety of sectors are expanding. Engineering and manufacturing, BFSI (banking, financial services, and insurance), healthcare, consulting, and flexible office operators are expected to play key roles in future office space expansion.

“In the next few years, average annual space take-up by engineering, manufacturing, and BFSI occupiers is expected to increase by 35%, while tech demand is likely to stabilize,” said Arpit Mehrotra, Managing Director of Office Services at Colliers India. Flex space operators are also expected to contribute, making up about 30% of domestic demand, as they expand into new regions.

Engineering and manufacturing, alongside BFSI, are projected to lease 11 to 12 million square feet of office space annually over the next three years, a sharp increase from the 8 to 9 million square feet in recent years. Together, these sectors will represent about 40% of the total demand for office space. Flex operators, meanwhile, will account for 15-20% of total office leasing as they explore emerging geographies.

Technology firms, which have shifted to hybrid and distributed work models, will stabilize their office space needs at approximately 15 million square feet. Hyderabad’s micro-markets, particularly the secondary business district (SBD), have already seen greater traction in office space leasing compared to Bengaluru, with other regions in Hyderabad also gaining momentum.

“Delhi NCR and Hyderabad are set to see office space demand rise above 10 million square feet in the coming years,” added Vimal Nadar, Head of Research at Colliers India. Other cities like Mumbai, Pune, and Chennai are expected to witness 20-30% annual demand increases. Additionally, smaller cities such as Bhubaneshwar, Chandigarh, Coimbatore, Indore, Jaipur, and Kochi are anticipated to experience healthy growth in their office markets.

As GCCs continue to grow and sectors beyond technology diversify their operations, India’s office space market is on track for robust development, further solidifying its position as a major player in the global commercial real estate landscape.