Office Spaces – the Shining New Star in Indian Real Estate

India loves its real estate – that is a given. But there is a new star on the investment horizon that is shining bright.

Did you know that leasing office spaces is a big contributor to India’s commercial real estate market buzz? In fact, India is a global leader in office leasing, with over 75.2 million square feet of Grade A office space being absorbed in 2024. This is an impressive 21% growth compared to the previous year, according to Savills India.

Bengaluru, Hyderabad, and Mumbai are the leaders in this race, contributing nearly 64% of the gross leasing activity. As we step into 2025, the no-longer-niche sector shows no signs of slowing down, with projections indicating a record-breaking absorption of 83-85 million square feet this year.

So, let’s put on our thinking caps and discuss what are office spaces and why are they the darlings of real estate investors.

What Are Grade A Office Spaces?

Let’s start with the basics.

Office spaces have a new avatar that is designed to cater to the operational demands of modern corporates – welcome to high-quality commercial properties with state-of-the-art infrastructure, energy-efficient systems, ample parking, advanced security, and prime locations in major urban centres. They are the preferred choice of corporations, tech giants, and startups due to their ability to boost efficiency and employee satisfaction.

Why Are Office Spaces in High Demand?

Increasing urbanization, infrastructure development, and the return-to-office trend are the primary reasons for this increased demand. Additionally, the growth of Workspace-as-a-Service (WaaS) players, such as WeWork and Table Space, has proven the undeniable appeal of Grade A office spaces.

Among others, these are some of the reasons for the rising demand for Grade A office spaces in India.

Strong Economic Growth: India’s continued robust economic performance over the past several years has boosted investor confidence and business expansion.

Booming Tech and BFSI Sectors: These industries are major drivers of leasing activity, requiring high-quality spaces to accommodate their growing workforce.

Urbanization and Infrastructure: The government has invested heavily into the development of metro lines, expressways, and smart cities, making Grade A spaces more accessible.

Employee-Centric Workplaces: Increasingly, more companies are prioritizing employee-oriented workspaces that promote productivity, collaboration, and well-being.

Global Capability Centers (GCCs): The recent emergence of GCCs and unicorn startups has further fueled demand for premium office spaces.

2024: A Landmark Year for Commercial Real Estate

In 2024, India’s commercial real estate sector experienced unparalleled growth, proving to be a profitable investment. Most metros across the country saw a surge in leasing of office spaces, including Gurgaon which recorded some pretty impressive deals.

Bengaluru topped the charts with an absorption of 22.9 million square feet, reflecting a 47% year-on-year increase.

In terms of annual growth, Hyderabad witnessed the highest at 52%, recording 13.1 million square feet in gross leasing.

Mumbai registered 12.2 million square feet in leasing activity, marking a 21% increase over the previous year.

Pune was not far behind, as its businesses absorbed 8.5 million square feet, showcasing a 20% year-on-year growth.

The Role of Workspace-as-a-Service Players

Interestingly, it is not just bare-bones commercial property in demand; the demand for flexible and managed office spaces has also surged. Flexible workspace operators now account for 20% of the new commercial space being taken up in India, indicating a significant shift in business dynamics.

Workspace-as-a-Service providers, such as WeWork, Table Space, and others, have redrawn the lines of how businesses approach office space. These providers offer comprehensive workspaces that combine flexibility, scalability, and modern amenities.

For instance, WeWork India has expanded its portfolio to over 8 million square feet across 62 locations, offering over 1 lakh desks in key cities like Bengaluru, Mumbai, Delhi, and Hyderabad. In 2024, Google leased 550,000 square feet from Table Space in Gurugram, showcasing the growing preference for managed workspaces among tech giants.

But what makes them appealing?

Flexibility: WaaS players allow businesses to lease spaces for short periods or long-term, catering to changing needs.

Cost-Effectiveness: They eliminate the need for businesses to invest in property maintenance or infrastructure.

Ready-to-Use Spaces: Fully equipped with high-speed internet, ergonomic furniture, and other amenities, these spaces are operational from day one.

Customizable Options: To a certain extent, tenants can personalize the space to align with their branding and operational requirements.

While these spaces are not cheap, the benefits they offer, from advanced ready-to-move-in facilities to strategic locations—fully justify the investment. Especially for businesses looking to establish a strong presence and facing time crunches, these office spaces are a match made in heaven.

Outlook for 2025 and Beyond

We do not foresee a change in the momentum in India’s commercial real estate sector – in fact, with the country contributing nearly 70% of the total net absorption in the Asia-Pacific region, it is clear that India is a preferred destination for global businesses.

In 2025, we expect that there will be a growing demand for office spaces in India. More multinational companies are setting up capability centres in India, while the bigger tech companies like Google, Amazon, and Microsoft are leasing large spaces to support their operations.

In addition, many startups achieving unicorn status are expanding their footprints, often opting for Grade A offices. With all this clamour, there is also a growing focus on sustainability, with green buildings and energy-efficient spaces shaping the future.

Summing up, the rise of Grade A office spaces and Workspace-as-a-Service players has revolutionized India’s commercial real estate market. As more businesses continue to prioritize quality, flexibility, and sustainability, the demand for these premium spaces will only grow. Whether you’re a startup, an established corporation, or a global giant, the opportunities in India’s commercial real estate sector are vast and promising.

And if you are an investor, contact Save Max and we will help you take advantage of this particular pot of gold.