Quarterly transactions in the office market reached a historic high of 28.2 million square feet in the January-March period, shows a Knight Frank report.
Global capability centres (GCCs) were the largest consumers of office space during the period, accounting for 44% of the total transaction volume.
A resurgence in demand from the third-party IT services sector contributed to this growth, with a 19% share of the office space market.
Shishir Baijal, CMD of Knight Frank India, said the demand for GCCs continues
to hit new highs as global perceptions of India as a long-term investment destination strengthen.
Baijal noted that the office space market faces minimal challenges, apart from constrained supply, and is well-positioned to maintain its momentum into 2025. GCCs accounted for 12.4 million sq ft of office space.
Viral Desai, senior executive director at Knight Frank, said the office space sector may be relatively insulated from developments regarding tariffs. “The value proposition of outsourcing to India, whether through GCCs or IT/ITES companies, remains strong, as the cost of establishing operations, including space and access to talent, amounts to about one-fifth of what it would cost elsewhere.”
Third-party IT services accounted for 5.5 million sq ft, representing 19% of the total space. India’s relative cost and quality advantages compared to other Asian economies, combined with an increasingly AI-driven environment, are likely to attract more occupiers in 2025. Tapering of work from home and the normalisation of returning to the office have also fuelled this demand for additional space by the IT sector.
According to the report, transaction volumes grew 74% year-on-year, reaching 28.2 million square feet in Q1.
Bengaluru was the leader, accounting for around 65% of all GCC transactions. The Bengaluru office market saw a growth of 259%, totalling 12.7 million sq ft in transactions.
Knight Frank India expects the office space segment to grow by 5-6% in 2025, aiming for 75-78 million square feet.