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Global captive centers fueling demand for large offices


India’s office market has witnessed a rebound in large deals, with more than 30 million square feet of office leasing transactions in top six cities, led by demand from global inhouse centers, or GICs, of top multinational companies and banks that rely on local engineering and technology talent for their worldwide operations.

The demand marks a 24% annual growth across the country’s top six cities, Colliers research showed.

Global centers, particularly in the technology and BFSI sectors, have cornered almost 40% of the significant deals in the top six cities.

Notable transactions involve names such as Bank of America, Philips, Wells Fargo, Qualcomm, and CitiBank, with deals concentrated in major southern cities such as Bangalore and Chennai.

“The Indian office market not only navigated initial uncertainties but exceeded expectations and emerged successfully, recording an impressive 58 million sq ft of gross absorption during 2023. The demand momentum, particularly during the last quarter, will pave the way for an optimistic start to 2024,” said Arpit Mehrotra, Managing Director, Head of Office Services, Colliers India.

GIC ExpansionsGlobal Capability Centres (GCCs) typically have large space requirements, and they, too, resumed their expansionary activities with greater fervour towards the second half of 2023, especially in the fourth quarter. By 2025, it is estimated that there will be 1900 total operational GCCs in the country, up from the existing 1580.“Large talent pools, cost-effective rentals, adequate Grade A developments, and a favourable office market ecosystem will continue to uphold India’s vantage positioning from a capability centre perspective. India’s low RE costs and the vast talent pool, along with rising digital spending and cost measures, are likely to hold weight as the hub of GCC too,” said Juggy Marwaha, CEO, Prestige Office Ventures.

In the last quarter of the year, the top six cities have witnessed the highest-ever demand for office spaces in India, with all three southern cities of Bengaluru, Chennai, and Hyderabad registering the best performance since the COVID-19 pandemic.

The sectoral contributions from BFSI and engineering and manufacturing sectors have almost doubled, increasing from 10-12% in 2020 to around 16-20% in 2023.

“The GCC industry has evolved to devise new technology plus business capabilities to provide complex top-of-the-pyramid innovations, building value back to the parent. Currently witnessing the 7th wave of innovation, GCCs today are more than just back offices for their headquarters; they are developing as key centres of development, growth, and business success,” said Thirumal Govindraj, CEO of RMZ Office.

Demand from Flex operators remained unabated; at 8.7 mn sq ft, flex space uptake in 2023 was 24% higher compared to 2022.

Flex penetration in the Indian office market is expected to rise further in 2024, as developers will likely adopt a core plus-flex strategy for decision-making.

“Increased preference for a combination of core and flex real estate space, heightened activity in Tier II markets, and next-gen offices with more sustainable elements will be the key themes for office markets in 2024. Moreover, healthy demand from domestic firms across technology, BFSI, manufacturing, and healthcare will result in equally strong demand for office spaces in 2024,” said Mehrotra.

Occupancy Rates

Led by rising demand and a steady influx of quality supply, overall vacancy rates are expected to be range-bound. With 50.1 mn sq ft. of new completions, fresh supply across the top six cities rose about 17% YoY, indicating higher developer confidence for near-term space uptake.

While Bengaluru accounted for 35% of the new completions in 2023, Hyderabad followed closely with almost 30% share at an India level.

The Indian office market has been under pressure, with large corporations holding back expansion plans due to hybrid work models and global economic uncertainties. However, a stable financial outlook has augured well for the Indian commercial real estate and office markets. It is expected to continue to witness steady interest from domestic and foreign-origin occupiers


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