Anticipating Growth: GCCs Expected to Lease 45-50 million Square Feet of Grade A Office Space by 2025
India’s commercial real estate sector is set for another milestone as the demand for office space is projected to surpass the 50 million square feet mark for the third consecutive year in 2024, according to industry reports. A significant contributor to this surge is the anticipated expansion of Global Capability Centers (GCCs), which are expected to lease approximately 45-50 million square feet of Grade A office space by 2025. This forecast, outlined in a recent report by Colliers, signifies the key role of GCCs in India’s business market and their growing importance in driving demand for premium office spaces across the country.
GCCs are offshore subsidiaries or service centers established by multinational corporations to leverage India’s skilled workforce and cost-efficient business environment. These centers typically require Grade A office spaces, which offer modern amenities, prime locations, and superior infrastructure, making them ideal for housing GCC operations. The appeal of Grade A office spaces lies in their ability to provide conducive environments for collaboration, innovation, and productivity, essential for GCCs to thrive and expand their operations seamlessly.
Several factors are driving the rise of GCCs in India. Compared to developed economies, India offers significant cost advantages on operational expenses, talent acquisition, and infrastructure development. India boasts a vast pool of skilled professionals across diverse sectors, making it easier for GCCs to find the right talent pool to staff their operations.
Commenting on the same, Aman Trehan, Executive Director, Trehan Iris, said, “The increase in demand for office space can be attributed to the positive economic outlook and improved business sentiment, which have instilled confidence within the market. As a result, GCCs have become essential in driving demand for commercial real estate, and promoting economic development. These Global Capability Centers hold significant importance in both the business and real estate sectors. A recent report by Colliers indicates that Global Capability Centers (GCCs) are likely to lease approximately 45-50 million square feet of office space within the next two years. Besides, the demand for office spaces in India is on the rise, particularly from companies that are looking to establish their capability centers in the country. Moreover, Delhi-NCR were the most preferred locations for commercial leasing and led the demand, accounting for nearly half of India’s total demand for office space last year. The pivotal role played by GCCs is set to shape the commercial real estate landscape of India in the near future, making it an opportune time for investors to consider the potential benefits of investing in this sector.”
The government’s focus on infrastructure development initiatives further strengthens this appeal. Improved connectivity through highways, air travel, metro expansion, and high-speed internet are all crucial factors for successful business operations. These initiatives play a vital role in making Indian cities more attractive options for GCC expansion.
Developers and investors are increasingly taking note of emerging micro-markets within established cities, recognizing the potential for high-quality office space catering specifically to GCCs. Delhi-NCR, for instance, is expected to see a strong pipeline of new developments catering to Grade A office space. Real estate developers and investors stand to benefit significantly from this growing demand. Building high-quality office spaces with a focus on sustainability and technology integration will cater to this specific clientele.
Ashish Sharma-AVP Operations, Brahma Group, said, “The demand for the office market in India is expected to perform well due to the increased activity from Global Capability Centers and sustained domestic demand. As a result, GCCs are playing a vital role in driving demand for commercial real estate and are expected to further boost office demand in the next 1-2 years. A recent report by Colliers indicates that there has been a 14% year-on-year increase in leasing activity in GCC in 2023, depicting a significant increase in the share of Grade A office space leased by domestic occupiers. However, there is a growing interest among occupiers from all sectors, which is expected to diversify the GCC landscape further. Moreover, the demand for office space in Delhi-NCR has increased significantly, depicting the occupier’s confidence in India’s economic stability despite global uncertainties. Besides, the significant impact of GCCs is poised to reshape India’s commercial real estate sector, and is likely to fuel the demand for office spaces.”
Besides, the surge in Global Capability Center office demand is reforming the commercial real estate business in the country. This trend is not only boosting office leasing activity but also driving overall office market dynamics in India. The long-term implications of GCC growth on India’s economy are significant, as it strengthens the country’s position as a preferred destination for global outsourcing and business process management.
Looking ahead, the outlook for GCCs remains promising, characterized by a blend of diversification, flexibility, and sustainability. As GCCs continue to expand their footprint in India, the projected demand for Grade A office space is expected to remain robust, further propelling the growth trajectory of India’s commercial real estate sector well into 2025 and beyond.
