GCCs to account for 40 pc of Grade A office space demand in India: Report

Bengaluru: Global capability centres (GCCs) are likely to account for almost 40 per cent of the demand for Grade A office space in the next few years in India, a report showed on Thursday.

The overall office market has gradually matured from a “Supply-led” market to a more “Occupier-driven” market and is likely at a turning point to see heighted growth and scaling up over the next few years, according to Colliers–RICS report.

Engineering and manufacturing and BFSI occupiers are projected to cumulatively account for 40 per cent of demand during 2025-27, leasing about 11-12 million square feet of office space each on an annual basis, up from 8-9 million square feet each in the past three years.

On the other hand, space uptake by technology firms will eventually stabilize at around 15 million square feet as they continue to embrace hybrid and distributed working models.

Additionally, flex space occupiers are likely to expand into newer geographies, accounting for 15-20 per cent of total office leasing in the next two-three years.

Arpit Mehrotra, Managing Director, Office services, India, Colliers, said that as GCCs reposition themselves as knowledge and innovation centres, they are likely to account for almost 40 per cent of the Grade A office space demand in next few years.

At the same time, demand from domestic-origin occupiers will remain robust, with about 30 per cent of the domestic-origin demand likely to come from flex operators.

Post-pandemic, average deal size across sectors have rationalized and was at around 43,000 square feet in 2023, a 11 per cent dip compared to 2019 levels. At the same time, number of deals rose by 44 per cent during the same period.

While Bengaluru remains amongst the leading markets for Grade A office demand across sectors, cities such as Hyderabad, Chennai, and Pune are rapidly catching up and seeing heightened demand from flex spaces, BFSI and engineering and manufacturing firms.

In pursuit of meeting their overall ESG goals, occupiers across all industries are prioritising green certified buildings, benefitting from tangible reduction in operational expenditures, the report mentioned.