GCC leasing in Tier-II cities surges 2X in FY25 on cost, talent advantages

GCC leasing in Tier-II cities surges 2X in FY25 on cost, talent advantages

Global Capability Centres (GCCs) in India are rapidly expanding their footprint in Tier-II and Tier-III cities, with their leasing share nearly doubling to between 15 and 20 percent in FY25 from around 7 percent in FY24. According to industry experts, this momentum could take the share to 30 percent in the near future, marking a structural shift in GCC strategy.

The move is being fuelled by factors such as cost savings of up to 25 percent, improved employee retention, rising infrastructure quality, and supportive government policies. Cities such as Coimbatore, Kochi, Ahmedabad, Indore, Jaipur, and Bhubaneswar are emerging as key destinations due to their skilled workforce and increasing connectivity.

“This isn’t a passing phase—it’s a structural shift,” said Amit Ramani, Chairman and Managing Director, Awfis Space Solutions. “Companies are going beyond pilots and making long-term commitments in these cities.”

According to industry experts, the growing traction in cities like Lucknow, Faridabad, Guwahati, and New Chandigarh is driven from firms in information technology (IT) services, banking, financial services, and insurance (BFSI), life sciences, and consulting. According to Ramani, over 140 new Global Capability Centres could be established in Tier-II and Tier-III cities in the next five years, driving the 30 percent growth in activity.

Arpit Mehrotra, Managing Director, Office Services, Colliers India, added that progressive state-level GCC policies and availability of skilled talent are further catalysing growth in cities such as Thiruvananthapuram, Visakhapatnam, and Chandigarh.

“As GCCs evolve into innovation hubs, emerging cities like Coimbatore, Bhubaneswar and Indore are becoming increasingly attractive. Their expansion can complement metro demand and potentially drive 10–20 percent of all-India absorption in the coming years," he added.

What the Data Shows

Despite the surge in smaller cities, metro markets continue to dominate. Bengaluru alone accounted for 10.2 million sq ft of GCC leasing in H1 2025, followed by Chennai (2.5 million) and Hyderabad (2.4 million), as per Knight Frank India.

“Office leasing in Tier-II and Tier-III cities is still relatively modest,” said Vivek Rathi, National Director – Research, Knight Frank India. “But there is growing curiosity. Cities like Coimbatore, Indore, Kochi and Jaipur are showing early promise as firms begin exploring these markets.”

Piyush Gandhi, Director at ANJ Group, echoed the trend: “While metros command the lion’s share, Tier-II and Tier-III cities now make up 10–15 percent of new GCC leases. The growth trajectory is what’s significant.”

Gandhi said there has been a 100–150 percent increase in leasing enquiries in these emerging markets, particularly from banking, financial services and insurance (BFSI), IT-enabled services (ITES), and life sciences firms. “Cities like Coimbatore, Ahmedabad, Kochi and Chandigarh are gaining favour due to better connectivity and improving infrastructure,” Gandhi added.

On similar lines, Ramani said: "Metro cities still lead GCC office absorption, accounting for 80–85 percent of total leasing in FY25. But Tier-II and Tier-III cities are catching up—jumping from 7 percent in FY24 to 15–20 percent now."

While the expansion into smaller cities is accelerating, challenges persist. Not all Tier-II cities have the necessary Grade-A office stock, ecosystem readiness, or support services in place. However, developers are responding by launching integrated projects combining office, residential, and retail spaces.

Mohit Goel, Managing Director, Omaxe, pointed out that 95 percent of India’s existing GCCs are still concentrated in just six cities. “With the number of GCCs expected to rise from 1,800 to nearly 5,000 by 2030, metros alone can't accommodate this growth. It will require rapid scaling in emerging cities.”

"These cities offer not just commercial appeal but support residential and retail demand too. Our projects aim to build self-sustaining ecosystems aligned with GCC needs," he added.

Flex and hybrid models gain ground

As GCCs expand into newer geographies, many are turning to flexible and hybrid workspaces for speed, scalability, and cost-efficiency. “Demand for flex and managed spaces is rising sharply in Tier-II cities, especially from mid-sized global firms,” said Ramani. These models are helping companies enter markets quickly before considering long-term build-to-suit offices.

GCCs have become one of the biggest drivers of demand in India’s institutional office market. Over the last four quarters up to Q1 2025, they contributed 40–60 percent of the leasing demand across listed Real Estate Investment Trusts (REITs)—much higher than their overall share of 28–29 percent in total office leasing.