FreepikRents Rise in India’s Commercial Hubs as Prime Office Space Dries Up
Demand from innovation hubs is outpacing construction, pushing vacancy to historic lows and handing leverage back to landlords
December 16, 2025Real Estate
Written by:Jorge Aguinaga
Key Takeaways
- Global Capability Centres have evolved into critical innovation hubs, driving a resilient, structural demand for Indian office space that withstands global economic headwinds.
- A critical shortage of Grade A stock has pushed vacancy rates into single digits in key micro-markets, leaving large occupiers with few options for expansion.
- This severe supply-demand imbalance has shifted leverage to landlords, driving sustained rental growth and making existing premium inventory highly valuable.
While global real estate markets grapple with uncertainty, the Indian commercial office sector is defined by a singular, powerful dynamic: a relentless supply-demand imbalance.
The narrative across major micro-markets is consistent, as robust demand driven by Global Capability Centres (GCCs) continues to significantly outpace the delivery of new, high-quality stock.
This great squeeze has pushed vacancy rates to historic lows in prime districts, creating a landlord-favourable environment where rental growth is not just a possibility, but a structural inevitability.
Investors note that the quality of talent available in India has made it indispensable, ensuring that even when global headwinds slow decision-making elsewhere, the commitment to expanding Indian footprints remains firm.
This structural shift means demand is less cyclical and more resilient, as multinational corporations lock in large spaces to secure their talent pipelines for the next decade.
While headline supply numbers might seem adequate, the investable or occupiable stock is surprisingly scarce. In key micro-markets, vacancy rates have plummeted to single digits, effectively meaning there is no vacancy for large corporate occupiers seeking contiguous space.
This scarcity is exacerbated by the time lag in construction; developers simply cannot build high-quality assets fast enough to catch up with the pace of leasing.
The compression of yields and the tightening of capitalisation rates are reflections of this intense competition. For investors, this fundamental tight market provides a layer of safety; even if capital values fluctuate, the rental income stream remains robust and growing.
It is this specific market mechanic - high demand clashing with low supply - that is driving the intense focus on refurbishment strategies, as creating new Grade A supply from old stock becomes the fastest way to alleviate the pressure.
These strategic insights were shared during the panel discussion on "Commercial Real Estate Strategies - Investment Outlook for Core, Core-Plus & Alternative Assets".
The session was moderated by Shobhit Agarwal, MD & CEO at ANAROCK Capital, and featured reflections from leading experts including Anshu Kapoor, President and Head at Nuvama; Manish Swaroop, CEO at Signature Global; Sunil Varrier, Chief Acquisition Officer at Table Space; and Vithal Suryavanshi, CEO- Commercial at Phoenix Mills.
Access the full takeaways and C-level insights in the exclusive India GRI 2025 Spotlight.
The narrative across major micro-markets is consistent, as robust demand driven by Global Capability Centres (GCCs) continues to significantly outpace the delivery of new, high-quality stock.
This great squeeze has pushed vacancy rates to historic lows in prime districts, creating a landlord-favourable environment where rental growth is not just a possibility, but a structural inevitability.
The GCC Engine
The primary force behind this demand is the rapid evolution of GCCs. No longer functioning merely as cost-saving back offices, these centres have transformed into high-value innovation hubs essential to global corporate strategy.Investors note that the quality of talent available in India has made it indispensable, ensuring that even when global headwinds slow decision-making elsewhere, the commitment to expanding Indian footprints remains firm.
This structural shift means demand is less cyclical and more resilient, as multinational corporations lock in large spaces to secure their talent pipelines for the next decade.
The Scarcity of Grade A Stock
While demand surges, the supply side faces a critical bottleneck. The market is witnessing a severe shortage of Grade A assets - the modern, ESG-compliant, amenity-rich buildings that today’s occupiers demand.While headline supply numbers might seem adequate, the investable or occupiable stock is surprisingly scarce. In key micro-markets, vacancy rates have plummeted to single digits, effectively meaning there is no vacancy for large corporate occupiers seeking contiguous space.
This scarcity is exacerbated by the time lag in construction; developers simply cannot build high-quality assets fast enough to catch up with the pace of leasing.
Supply Imbalance Fuels Rental Growth
The direct consequence of this imbalance is a strong upward trajectory in commercial rents. With tenants competing for a limited pool of premium assets, landlords possess significant pricing power.The compression of yields and the tightening of capitalisation rates are reflections of this intense competition. For investors, this fundamental tight market provides a layer of safety; even if capital values fluctuate, the rental income stream remains robust and growing.
It is this specific market mechanic - high demand clashing with low supply - that is driving the intense focus on refurbishment strategies, as creating new Grade A supply from old stock becomes the fastest way to alleviate the pressure.
These strategic insights were shared during the panel discussion on "Commercial Real Estate Strategies - Investment Outlook for Core, Core-Plus & Alternative Assets".
The session was moderated by Shobhit Agarwal, MD & CEO at ANAROCK Capital, and featured reflections from leading experts including Anshu Kapoor, President and Head at Nuvama; Manish Swaroop, CEO at Signature Global; Sunil Varrier, Chief Acquisition Officer at Table Space; and Vithal Suryavanshi, CEO- Commercial at Phoenix Mills.
Access the full takeaways and C-level insights in the exclusive India GRI 2025 Spotlight.