by THO
Driven by demand from Global Capability Centers (GCCs), engineering and manufacturing sectors, BFSI, and flexible office spaces, gross leasing across the top six cities is projected to reach 65-70 million sq ft in 2025. Bengaluru is expected to contribute around one-third of the total office space demand.
The asset quality of commercial real estate is anticipated to improve, with developers focusing on the construction of high-quality, rent-generating assets, with plans to list them as Real Estate Investment Trusts (REITs), according to a report by Colliers India.|
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Bengaluru to account for an estimated one-third of the overall office space demand in 2025
Colliers’ latest report, ‘India Office: Setting New Standards for 2025,’ released at the FICCI 18th Real Estate summit on February 11 said Bengaluru is expected to account for an estimated one-third of the overall office space demand in 2025, led by space uptake from GCCs, engineering and manufacturing firms and flex space operators.
While Bengaluru will continue to lead the other major markets by a considerable margin, Hyderabad and Delhi NCR are likely to see heightened activity and register 10-15 million sq ft of leasing activity each, 5-10% higher compared to the previous year, the report said.
Mumbai, Chennai, and Pune will continue to be preferred by occupiers from the BFSI, engineering, and manufacturing sectors and flex space operators, respectively. The report showed that the three cities are likely to witness 5-10 million sq ft of Grade A office space demand each in 2025.
Engineering and manufacturing, BFSI firms, and flex space operators are expected to drive office demand in 2025, with each segment poised for a 10-15% annual rise in space uptake. Cumulatively, these three sectors are likely to continue to account for half of the leasing activity in 2025. The engineering and manufacturing sector will see heightened activity across most major office markets, with Bengaluru likely to dominate leasing volumes, it said.
BFSI firms will continue to prefer having a presence in Mumbai, but increasing traction in Bengaluru, Hyderabad, and Pune highlights a growing trend of diversification beyond traditional hubs. Meanwhile, it added that flex space operators are set to emerge as one of the leading demand drivers, accounting for nearly 20% of total leasing activity in 2025.
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GCC demand to further gain ground in India
GCC leasing saw a 41% YoY increase in 2024, at 25.7 million sq ft across the top 6 cities. This demand is expected to increase further and be close to 30 million sq ft, accounting for around 40% of the total office space demand in 2025. Bengaluru and Hyderabad are likely to remain preferred knowledge and innovation-driven GCC hubs. In line with past trends, US-based companies will likely drive GCC expansion across most markets and contribute around 70% of the GCC demand in 2025, led by technology, BFSI and engineering and manufacturing firms.
Asset quality to improve with increasing focus on sustainability and inclusion in REITs
With REITs in India gaining traction, driven by increasing retail investor participation and a favourable regulatory environment, developers focus on curating high-quality real estate portfolios.
“India’s commercial real estate is focused on creating high-quality assets, and leading developers prioritise constructing high-quality, rent-yielding assets to ultimately list them as REITs. At the same time, rising demand for green-certified workplaces is pushing developers to align with global sustainability standards and increasingly focus on energy efficiency, carbon reduction, and environmental compliance. Over the past few years, green leasing has been gaining traction, and 80-85% of Grade A office space demand in 2025 is likely to be concentrated in green-certified developments,” said Vimal Nadar, Senior Director and Head of Research, Colliers India.
