BENGALURU: Domestic companies are stealing the show in office leasing spaces, with Bengaluru and Hyderabad seeing an increase in occupancy since 2022. A recently released report ‘India Inc’s Ascension -- The Rise of Domestic Firms as an Office Demand Driver’ by real estate consultant CBRE, highlighted a shift in India’s office leasing trend.
Currently, domestic companies account for nearly 47 per cent of overall office leasing activity from 2022 to the first half of 2024, marking a significant change from traditional dominance of global corporations, particularly American firms.
In 2022-2023 alone, domestic firms witnessed a 60 per cent increase in office space absorption compared to the two pre-pandemic years of 2018-2019. The report predicted domestic firms are expected to lease 60-65 mn sqft office space in 2024-2025.
Cities like Bengaluru and Hyderabad saw increased occupancy by e-commerce and life sciences firms respectively, reflecting their strong growth trajectories. Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, said, “Domestic firms are demonstrating a strong commitment to growth and expansion, which is set to drive substantial office space absorption in the coming years.
India’s rapidly expanding start-up ecosystem and talent abundance are major drivers of this demand. India’s top nine cities are poised to see an impressive addition of 185 million sqft of premium office space by 2026.”
The driving forces for this trend are the availability of flexible space operators, growth of technology and allied sectors and BFSI (banking, financial services and insurance), and technology firms – these three factors have collectively accounted for two-thirds of all domestic office leasing activity in the country.
The report mentions that advances in technology, particularly AI, are expected to further drive this demand, offering challenges and opportunities for the workforce and real estate markets.
“Indian IT majors are anticipated to expand their workforce and engage in mergers and acquisitions starting in late 2024. This strategic growth is expected to be driven by a focus on innovation as these companies seek to enhance their technological capabilities and market presence.
Moreover, emerging technologies are projected to generate approximately 4.7 million tech jobs over the next five years across diverse sectors, including manufacturing, retail, education, finance and insurance,” read the CBRE report.
Additionally, a talent pool of approximately 2.5 million STEM graduates and a growing startup ecosystem featuring over 100 unicorns and more than 1,00,000 startups will further fuel growth. With over 38 sector skill councils, it will encourage domestic capacity in terms of future readiness, which is considered a major indicator for the growth of domestic firms and office sector.