Record leasing in quality office space, especially of carbon-neutral facilities, has led to an increase in pre-commitments by corporates, industry leaders told ET.
Pre-commitments refer to lease deals companies sign at the construction stage.
At present, India is facing a shortage of approximately 20 million sq. ft. of Grade A+ office space annually, as demand for quality office space continues to outstrip supply, said Cushman & Wakefield.
“Corporates are becoming increasingly particular about carbon-neutral offices. This is why any quality building that has taken measures to protect the environment is able to secure tenants before completion,” said Vibhor Jain, founder and CEO, Carbon Guardians, a company that provides carbon-neutral managed office spaces. “Leading developers are fully leasing their buildings even before construction is completed.”
In 2024, India’s office sector recorded an unprecedented 89 million square feet (MSF) of gross leasing volume (GLV) across the top eight cities, as per a Cushman & Wakefield report.
This growth was primarily driven by fresh demand from multinational corporations, the optimisation of pre-leased buildings in key cities and a higher return to office.
One of the key drivers of this growth was the swift closure of deals by global multinationals and domestic companies, indicating a rise in occupier confidence.
“India’s top office markets have the capacity to absorb over 90-100 million sq. ft. of supply, and quality supply is crucial for capacity building,” said Peush Jain, MD of Commercial Leasing and Advisory at Anarock Group. “Corporates are looking for both conventional and managed workspaces, prompting developers to deliver world-class buildings with an ecosystem of sustainable development.”
Demand for quality office space is prompting companies to tie up leases even during the construction phase.
“This flight to quality will drive many corporates toward pre-commitment and forward leasing across India,” added Jain. “Additionally, developers can leverage additional FSI through TOD/TDR to reassess their portfolios for redevelopment or recalibrate base builds with functional improvements.”
Despite this strong demand, the supply of Grade-A office buildings struggled to keep pace.
The year saw only 45 MSF of new Grade-A completions, leading to a vacancy rate of 16% in 2024, a decline of 1.8-2 percentage points from the previous year.
Core markets across major cities tightened further due to increased demand from multinationals. However, 2025 is expected to witness a recovery in supply, with a substantial portion coming from suburban markets in key cities.
Global Capability Centers (GCCs) accounted for 27-29% of overall office space demand in 2024, underscoring their growing significance in India’s economy and commercial real estate sector.
