Why India is winning the global office market race

While the global market is experiencing weakness in office and retail, India stands out as an outlier, with broad growth across all three segments: office leasing, retail expansion, and industrial logistics demand. India’s resilience in H1 2025 is especially notable amid global economic uncertainties stemming from multiple wars and shifting global trade policies under the Trump administration.

India's twin growth engines of GCC dominance and strong domestic occupier demand have fuelled the office market's historic trajectory in the second quarter (Q2 2025), with gross leasing reaching 21.4 million sq. ft, the highest for any second quarter. For the first half of 2025, gross leasing hit a new high of 39.45 million sq. ft, up 17.6% YoY, despite global economic headwinds (JLL).

This has propelled net absorption in January–June 2025 (H1 2025) to an unprecedented 48.9 million sq. ft, marking the highest-ever half-yearly volume recorded across the country. On a YoY basis, this represents a 41% jump over H1 2024, highlighting the sector’s sustained momentum and occupiers' growing confidence in India’s commercial real estate (Knight Frank).

The office market across the top 8 cities saw 12.5 mn sq. ft. of new completions in Q2, up 53% YoY. New supply rose 14% YoY to 23.2 mn sq. ft. in H1 FY26, with over 60% of it concentrated in Bengaluru and Pune. Pune led with 8.0 mn sq. ft., its highest-ever half-yearly supply, as per Cushman data. Yet, completions remained modest as developer focus had long been skewed toward residential projects.

Let's explore reasons why India is becoming a favourite office destination for global and domestic companies:

1. Demand is rising even though new office completions are falling

Since 2021, new office buildings haven’t kept pace with strong leasing demand, causing vacancy rates to fall from 17.2% to 14.7% by mid-2025. In prime business areas like CBDs and SBDs, very few offices remain empty, driving up rents, especially for Grade A spaces. Because demand is strong and supply is tight, landlords now have the upper hand and are raising rents, even amid global market uncertainty.

This year, all major Indian cities saw rent increases, led by Mumbai (12%), NCR (8%), and Bengaluru (7%) (Knight Frank). "The sustained demand for high-quality office spaces owing to occupiers’ confidence has propelled transaction volumes to historic highs," says Shishir Baijal, Chairman & Managing Director, Knight Frank India.

As the world shrinks its physical footprint, India is expanding its role in global corporate ecosystems. "Today, businesses are not just looking for office spaces; they are in search of comprehensive and integrated ecosystems that support business continuity, enhance employee experience, and ensure cost efficiency," says Abhishek Trehan, Executive Director, Trehan Iris, a Gurugram-based real estate developer with significant retail and commercial presence.

2. Global slowdown is triggering more consolidation in India, not less

Amid global uncertainty, one might expect companies to cut office space. Instead, they are consolidating operations in India to lower costs. JLL says international firms continue to view India as a "strategic" talent hub, accounting for 61.5% of Q2 leasing volumes, with GCCs leasing more space in Jan–June 2025 than any previous first half. Bengaluru alone contributed over 50% of it. Pre-commitments touched 46% in cities like Bengaluru, showing occupiers' urgency to secure space in advance. "Bengaluru's office market dominance reflects India's evolving economic landscape, with its record-breaking Q1 2025 performance capturing 37.6% of national leasing activity," says Rahul Arora, Head - Office Leasing & Retail Services, Senior MD (Karnataka, Kerala), India, JLL.

So instead of operating in multiple high-cost locations, companies are centralising operations in India, drawn by its deep, affordable talent pool, improving infrastructure, and increasing policy support. "Leveraging India's extensive talent pool, robust corporate ecosystem and supportive industry-specific policies, global firms are increasingly positioning their GCCs as strategic hubs. These GCCs are seen to be evolving into second headquarters," Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE tells Fortune India.

India’s office boom is a result of a perfect convergence of demand, demographics, and digital transformation, say industry watchers. During the pandemic, global firms, especially in financial services, had to rapidly digitise, and much of that build-out was powered by India. GCCs grew headcount by 15-30% during this time, but remote work delayed immediate space requirements.

"With tighter immigration policies, it’s harder to move talent out of India. At the same time, many global organisations are navigating challenges in accessing skilled talent, particularly in engineering and digital roles. The natural outcome: work is coming to India, not the other way around," Manoj Marwah, Financial Services GCC Consulting Leader – EY India, tells Fortune India.

3. GCCs are no longer back offices; they’re innovation engines

GCCs are driving India’s office market, leasing more space in Jan–June 2025 than in any previous first half. They made up the largest occupier share at 39% in H1 2025. BFSI and manufacturing GCCs accounted for 55.6% of H1 leasing volumes. Tech firms secured 9.1 mn sq. ft. in H1, 75% of their entire 2024 footprint, as they pivot toward high-value transformative tech.

"The expansion of tech and BFSI GCCs into multi-functional centres led by projected headcount increases, consolidation, and new entrants is expected to further boost India’s GCC leasing activity," says Magazine of CBRE. Indian tech and banking firms are also expanding services, contributing to strong office demand.

As these centres mature in complexity and scale, they're handling innovation, digital transformation, and strategic roles. "India’s deep talent pool and improving infrastructure continue to reinforce its positioning as a global hub. At the same time, we are seeing more diverse sources of demand from domestic corporates, financial institutions, and flex players," says Anshul Jain, Chief Executive, India, SEA & APAC Tenant Representation, Cushman & Wakefield.

"They’re taking on core digital, analytics, and customer experience mandates. As a result, global firms are doubling down, building larger, more premium office spaces that reflect their long-term commitment to India," adds EY's Marwah.

The surge in GCCs leasing Grade A spaces in H1 2025 underscores a long-term recalibration. “Multinationals are no longer viewing India as a supplementary backend location, but as a critical operations HQ where core functions like R&D, finance, analytics, and customer experience are housed,” says Trehan.

4. Flex spaces are expanding beyond startups and tech firms

The first half of 2025 witnessed a record 10.2 mn sq. ft. of flex leasing, a 43% YoY jump, marking the highest ever for any six months. Co-working spaces accounted for 76% of this absorption. BFSI, consulting, and even manufacturing firms are now major flex-space occupiers, reflecting a shift away from startup-only usage.

"The demand for flexible workspaces is projected to grow at a CAGR of 27–28% between 2019 and 2026... For the last 3–4 years, IT, software development, and BFSI sectors have led the adoption of flex workspaces, and this trend shows no signs of slowing down," says Amit Ramani, Chairman and MD, Awfis Space Solutions, tells Fortune India.

Flex spaces are increasingly becoming a strategic workspace choice across all company sizes. "At Awfis, 66% of our clients are large enterprises or MNCs, while startups account for 13%, reflecting a broadening of the flex space user base... They have become integral to the workspace strategy of companies of all sizes," adds Ramani.