The Rise of Domestic Firms in India’s Office Leasing Market: A Game-Changing Shift

As the Indian economy continues its rapid evolution, domestic companies are making bold moves to transform the commercial real estate landscape. For the first time, homegrown firms are overtaking global corporations in office space leasing, marking a pivotal shift in the market. According to CBRE South Asia Pvt. Ltd.’s latest report, ‘India Inc’s Ascension – The Rise of Domestic Firms as an Office Demand Driver’, domestic firms now account for nearly 47% of total leasing between 2022 and H1-2024. This shift is reshaping the future of office demand across India’s major urban centers, with substantial growth forecasted for the years to come.

Record-Breaking Office Leasing by Domestic Firms

From 2022 to H1-2024, domestic companies have surged in the office leasing market, a space once dominated by multinational corporations, especially from the U.S. This is set to grow even further as Indian firms are projected to lease 60-65 million sq. ft. of office space between 2024-2025. This dramatic increase reflects the overall confidence in India’s business environment and the country’s booming sectors such as technology, manufacturing, and BFSI (banking, financial services, and insurance).

Key cities like Delhi-NCR, Bengaluru, and Mumbai have emerged as leading hubs for office leasing by domestic firms. For example, in Mumbai, domestic BFSI leasing accounted for 43% of the market, while Bengaluru saw a rise in leasing by e-commerce companies, and Hyderabad by life sciences firms. This growing demand underscores the fact that India’s top nine cities will witness approximately 185 million sq. ft. of premium office space added by 2026.

Government Initiatives and Economic Growth as Key Drivers

India’s vibrant office market is being propelled by several factors, notably government initiatives such as the Make in India program and the Production Linked Incentive (PLI) Scheme. These efforts have bolstered the manufacturing sector, leading to a surge in office leasing as domestic firms expand their operations. Additionally, India’s robust banking sector, improved corporate access to capital, and the creation of over 2.5 million STEM graduates each year are fueling unprecedented growth.

The Indian start-up ecosystem, with over 100 unicorns, and over 100,000 start-ups, is also a major driver behind this surge. Further supported by the government’s efforts to address skill gaps through initiatives like the 38 sector skill councils, domestic firms are better equipped for future growth.

Top Leasing Sectors: Flexible Space, Technology, and BFSI

Three key sectors—flexible space operators, technology, and BFSI—are currently driving two-thirds of all domestic office leasing activity in India. This trend is likely to continue as the flexible workspace concept gains momentum, with projections estimating flexible space stock to reach 80 million sq. ft. by 2024.

Technology firms are at the forefront of this surge, particularly as artificial intelligence (AI) and other emerging technologies take center stage. Although AI may disrupt certain jobs, it is simultaneously expected to create approximately 4.7 million new tech jobs in the next five years across industries such as manufacturing