India’s commercial office space sector is set for sustained growth, with demand projected to reach 65-70 million square feet in 2025, according to a new report by FICCI and Colliers India. The sector recorded an impressive 66.4 million sq ft of absorption in 2024, reflecting a 14% year-on-year increase. Vacancy levels are expected to decline to 15-16% next year, while rental values are forecasted to climb to Rs 100-110 per sq ft per month.

The shift from a supply-led to an occupier-driven market has been solidified by three consecutive years of leasing volumes exceeding 50 million sq ft. Bengaluru led the market with its highest-ever absorption of 21.7 million sq ft in 2024, while Hyderabad witnessed the strongest growth, registering a 55% increase in leasing activity. The dominance of the technology sector in office leasing has declined significantly from 40-50% in previous years to just 25%, as engineering and manufacturing firms, banking and financial services, and flexible workspace operators now account for more than half of all Grade A office space absorption.

Global Capability Centres (GCCs) have emerged as a dominant force, with leasing activity surging 41% year-on-year to reach 25.7 million sq ft in 2024. “Bengaluru captured 47% of GCC leasing, while Mumbai saw a remarkable fourfold increase in GCC uptake compared to 2023,” said Arpit Mehrotra, Managing Director of Office Services at Colliers India. Raj Menda, Chairman of FICCI’s Committee on Urban Development, projected further expansion in the sector, stating, “Office leasing is expected to grow another 8-10% in FY26, fueled by GCCs and the financial services sector demand.”

Sustainability continues to play a crucial role in shaping the market. More than 70% of leasing in 2024 was concentrated in green-certified buildings, with this share expected to rise to 80-85% in 2025. “Nearly 80% of new supply over the next 2-3 years will be green-certified,” added Menda. Industry experts emphasise that talent acquisition and execution efficiency will be critical for continued sectoral growth. “The sector needs execution build-up and brilliant talent, including white-collar and blue-collar jobs,” noted Gaurav Pandey, Co-Chairman of FICCI’s Committee on Urban Development, underlining the importance of developer focus on labour strategy and talent management.

Investment activity in commercial real estate has also been robust, with institutional inflows reaching USD 4.7 billion in the first nine months of 2024. Over 60% of these investments were directed toward industrial, warehousing, and residential assets. Sriram Khattar, Vice Chairman & Managing Director of Rental Business at DLF, highlighted the key drivers of this surge: “GCCs, technology companies, and managed office space players are providing strong impetus. Companies offering Grade A++ properties, scalability, and adherence to sustainability and safety norms are preferred.”

With strong leasing momentum, evolving occupier preferences, and a growing focus on sustainability, India’s commercial office market is poised for another dynamic year in 2025, reaffirming its resilience and adaptability in a rapidly transforming economic landscape.