Local Office Demand: How Indian Firms Are Shaping the Market

by Ashok

Posted on June 17, 2025

Local Firms Drive Office Demand in India

Surge in Domestic Office Leasing

Local, or domestic, firms have emerged as a major force in driving office space demand across India’s top cities. Since 2022, these firms have accounted for nearly 47% of all office leasing activity, a significant rise from their one-third share before 2022. This marks a transformative shift in the Indian office market, which was traditionally dominated by global, especially American, corporations.

Key Drivers and Sectors

• The surge is led primarily by sectors such as Banking, Financial Services and Insurance (BFSI), manufacturing, and technology.
• Flexible space operators (co-working and managed office providers) are also a major contributor, reflecting changing workplace preferences and the need for adaptable office solutions.
• The RCA (research, consulting, and analytics) sector, along with legal, HR, and media services, is increasingly active in leasing.
• Engineering, manufacturing, retail, and FMCG firms, while currently smaller contributors, are expected to expand their office footprints, especially in emerging Tier-II and Tier-III cities.

Regional Trends

• Delhi-NCR leads in domestic office leasing, followed by Bengaluru and Mumbai.
• Mumbai stands out with a 43% share of domestic BFSI leasing, while Bengaluru and Hyderabad are seeing strong demand from e-commerce and life sciences companies.
• Chennai and Pune are also gaining traction due to a robust talent base and new supply pipelines.

Market Impact and Outlook

• Domestic firms are projected to lease 60–65 million sq. ft. of office space between 2024 and 2025.
• The increased activity from local companies is tightening the commercial real estate market, leading to greater competition for prime spaces and likely upward pressure on rents.
• This trend is expected to foster innovation and quality improvements in office offerings, while also enhancing market stability by diversifying tenant portfolios and reducing reliance on international occupiers.
• The expansion is supported by government initiatives like “Make in India” and the Production Linked Incentive (PLI) Scheme, a strong start-up ecosystem, and a large STEM talent pool.

Quotes from Industry Leaders

“The surge in demand for office space, driven by sectors such as technology and BFSI, reflects a broader trend of domestic occupiers leading the charge in a recovering economy. As the market evolves, we anticipate a growing demand for flexible office spaces that cater to the dynamic needs of businesses.”
— Ashish Sharma, AVP-Operations, Brahma Group

Summary Table: Domestic Firms’ Role in Office Demand

Conclusion

Domestic firms are now central to India’s office space demand, reshaping the commercial real estate landscape. Their expanding presence, driven by robust economic fundamentals and sectoral growth, is expected to sustain high leasing activity and drive innovation in the office market for years to come.

Ref: Domestic office market surges as India becomes hub for global occupiers