CREDAI Reports Reveal India's Office Leasing Market Witnesses Significant Recovery as GCC Boom Drives Down Vacancy Rates

Industry experts have revealed that India's commercial office space market is experiencing a notable turnaround, with vacancy rates declining significantly due to robust demand from Global Capability Centres (GCCs) and strengthening domestic requirements, according to findings from the latest CREDAI-CRE Matrix report released on August 30, 2025.

Market Performance Indicators Show Strong Recovery Trajectory

The comprehensive report indicated that vacancy rates have dropped by 210 basis points compared to the previous year, signaling renewed confidence in India's commercial real estate sector. Market analysts noted that office space absorption reached 34.5 million square feet during the first half of 2025, while new supply additions totaled 28.8 million square feet during the same period.

Multiple Growth Drivers Fuel Market Expansion

Real estate consultants have identified several key factors contributing to this market revival. The expansion of Global Capability Centres establishment has emerged as a primary demand driver, with enterprises increasingly establishing these facilities to leverage India's skilled workforce and cost advantages.

Sector-wise Leasing Patterns Emerge

Industry reports highlighted that diverse tenant categories are contributing to leasing momentum. Information Technology and IT-enabled Services companies continue to dominate with a 24% share of leasing activity, followed by Banking, Financial Services, and Insurance sectors at 20%, while co-working space providers account for 19% of total demand.

Tier-II Cities Gain Prominence in Supply Distribution

Market observers noted that emerging urban centers like Pune, Hyderabad, and Bengaluru are attracting the majority of new office space supply and demand. Hyderabad particularly stands out with the highest co-working space market share at 29%, reflecting changing workplace preferences.

Flexible Work Models Transform Office Space Utilization

Property consultants observed that the transition toward hybrid work arrangements and co-working space adoption is significantly boosting uptake of modern office formats. This shift reflects evolving corporate strategies to provide flexible workspace solutions for employees while optimizing real estate costs.

Market Implications Point to Sustained Growth

Real estate analysts emphasized that declining vacancy rates coupled with high absorption levels reflect growing tenant confidence in India's established commercial hubs. Market experts predict robust growth ahead, with continued GCC entries and evolving work preferences expected to sustain strong leasing activity through FY26 and beyond.

Decentralization Trend Relieves Metro Pressure

Industry specialists noted that the emergence of Tier-II cities as key contributors is helping to relieve pressure on traditional metropolitan markets. This geographical distribution of demand is creating new investment opportunities and supporting balanced regional development in the commercial real estate sector.

Future Outlook Indicates Continued Momentum

Market forecasters concluded that with vacancy compression and healthy leasing trends, India's office real estate sector appears positioned for sustained momentum. The continued growth trajectory of GCCs, alongside evolving occupier requirements, signals promising prospects for commercial property developers and investors throughout the sector.