by THO
Domestic IT, BFSI and flexible space firms are estimated to lease 60-65 mn sq ft office space between 2024-2025 across Delhi-NCR, Bengaluru and Mumbai. This marks a departure from the traditional dominance of global corporations, particularly American firms, according to a report by CBRE South Asia Pvt Ltd.
IT, e-commerce and life sciences companies have driven occupancy in Bengaluru and Hyderabad, respectively, while Mumbai has captured a substantial 43% share of domestic BFSI leasing, with strong contributions from Delhi-NCR and Chennai, said a report titled ‘India Inc’s Ascension – The Rise of Domestic Firms as an Office Demand Driver’.
“Domestic firms are demonstrating a strong commitment to growth and expansion, which is set to drive substantial office space absorption in the coming years. India’s rapidly expanding start-up ecosystem and talent abundance are major drivers of this demand. This surge in office space leasing by Indian firms reflects a broader trend towards high-quality, adaptable work environments that cater to the evolving needs of businesses,” said Anshuman Magazine, Chairman and CEO, India, Southeast Asia, Middle East & Africa, CBRE, said.
Domestic firms stole the show in office leasing, accounting for nearly 47% of total leasing during 2022-H1 2024. During 2022-2023, domestic firms witnessed a significant 60% increase in office space absorption compared to the two pre-pandemic years of 2018-2019, the report said.
Further, major occupier groups acquired substantial spaces in prime locations across key cities, with Delhi-NCR leading the way, followed by Bengaluru and Mumbai. Cities like Bengaluru and Hyderabad saw increased occupancy by e-commerce and life sciences firms, respectively, reflecting their strong growth trajectory, it showed.
Mumbai emerged prominently with a 43% share of domestic BFSI leasing, bolstered by substantial contributions from Delhi-NCR and Chennai during 2018 – H1 2024. Additionally, domestic technology firms have been expanding their office footprints to meet the rising demand for tech-driven solutions, it showed.
Growth supported by several factors
The growth in India’s office market is supported by various factors, including government initiatives like the Make in India program and the Production Linked Incentive (PLI) Scheme, increased profitability and a well-capitalized banking sector, the report noted.
Steps taken to scale domestic manufacturing capability, accompanied by higher import substitution and employment generation, are fostering a sustainable business environment. Besides, factors like low corporate leverage ratios and improved access to capital are enabling substantial expansion in investment capacity, providing a launchpad for Indian companies to expand.
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Additionally, a talent pool of approximately 2.5 million STEM graduates and a burgeoning start-up ecosystem featuring over 100 unicorns and more than 100,000 start-ups is further fuel the growth, it added.
