Domestic companies make up nearly half of office space leasing since 2022, shows report

Prior to 2022, Indian firms leased around one-third of the office spaces in a year.

Domestic companies accounted for around 47 percent of all office spaces leased out between 2022 and the first six months of 2024, according to property consultant CBRE. This was up from a one-third share of the pie they had before the period under observation. The agency predicts that the homegrown firms will take 60-65 million square feet on rent in the next one year.

Over 2022 and 2023, the Indian firms leased around 58 million square ft in office space, while that in the January to June period in the ongoing year was around 14 million square ft, the agency said in a report.

American companies were the key absorbers of office space in India, taking up 53 percent of the rented property in 2021, as many of them went on a hiring spree after the pandemic. However, with a host of geopolitical issues flaring up, collapse of technology-linked banks, as well as inflationary trends, overseas corporates began cutting down on costs through layoffs, and vacating office spaces across the country.

Indian firms across technology, financial services, engineering sectors, as well as some European firms homed in on the rented office realty space as they began investing in strategic functions through global capability centres (GCCs), backed by local initiatives such as the production-linked incentives (PLIs) across various sectors. GCCs are slated to drive around 40 percent of office space demand in India from 2025 to 2027, according to a report from Colliers.

The share of European, Middle-Eastern, and African companies in office space leasing in India has increased steadily since 2021, rising to 19 percent in the January-to-June period this year, compared to 9 percent in 2021.

CBRE stated that continued investments in technology may create 4.7 million jobs over the next five years in the technology sector, by far the largest office space lessee in India, although some job displacements may also be in the offing.

"Advances in technology, especially artificial intelligence (AI), are poised to further transform the office sector. While AI may cause job displacement in some areas, it will also create opportunities and necessitate comprehensive workforce reskilling. The surge in workforce needs, driven by digitalisation, evolving workplace strategies, and enhanced business confidence, has substantially boosted the leasing activity," said Ram Chandnani, managing director of advisory and transaction services at CBRE India.