India is grappling with an annual shortfall of approximately 20 million square feet of Grade A+ office space as demand for high-quality workplaces surpasses available supply, according to real estate consultancy Cushman & Wakefield.
Corporate tenants, particularly those prioritizing carbon-neutral facilities, are increasingly signing pre-commitment leases—agreements made before a building is completed—industry leaders told The Economic Times, as published by the ET.
“Corporates are becoming increasingly particular about carbon-neutral offices,” said Vibhor Jain, founder and CEO of Carbon Guardians, a provider of managed office spaces with sustainability features. “Any high-quality building implementing environmentally responsible measures is securing tenants well before completion. Leading developers are fully leasing their buildings even before construction concludes.”
In 2024, India’s office sector recorded an all-time high gross leasing volume of 89 million square feet across the top eight cities, according to a Cushman & Wakefield report. This surge was fueled by fresh demand from multinational corporations, optimization of pre-leased buildings, and a stronger return-to-office trend.
One of the key drivers of this leasing boom was the accelerated closure of deals by global corporations and domestic firms, reflecting growing occupier confidence.
“India’s top office markets have the potential to absorb more than 90 to 100 million square feet of supply, and ensuring a steady stream of high-quality space is critical for market growth,” said Peush Jain, managing director of commercial leasing and advisory at Anarock Group. “Corporations are seeking both conventional and managed workspaces, prompting developers to deliver world-class buildings with sustainable development ecosystems.”
The high demand for premium office space is pushing companies to secure leases during the construction phase, a trend expected to persist.
“This flight to quality will drive more corporations toward pre-commitment and forward leasing across India,” Jain added. “Additionally, developers can optimize additional floor space index through transit-oriented development and transferable development rights to reassess their portfolios or enhance base building functionality.”
Despite the strong demand, new Grade A office completions lagged behind, with only 45 million square feet added in 2024. This supply crunch contributed to a vacancy rate of 16%, a decline of 1.8 to 2 percentage points from the previous year.
Core office markets across major cities tightened further due to heightened multinational leasing activity. However, 2025 is expected to see a supply rebound, with significant deliveries anticipated in suburban markets.
Global Capability Centers (GCCs) played a significant role in shaping office demand, accounting for 27% to 29% of total space absorption in 2024. Their expansion underscores their growing influence on India’s commercial real estate landscape and overall economy.
Developers are also leveraging additional Floor Space Index (FSI) through Transit-Oriented Development (TOD) and Transferable Development Rights (TDR) to reassess their portfolios for redevelopment or recalibrate base builds with functional improvements. This approach is expected to further strengthen supply in key markets.