Analysing domestic occupiers' footprint in India Office Market

India’s office market has made significant gains during the past three years, with leasing activity in 2023 breaching the previous highs and was followed by unprecedented record levels seen in 2024. Q1 2025 has begun on the same note, carrying forward the momentum. The office market in India presents a unique picture – global firms have consistently been the larger contributor to the leasing activity levels compared to domestic firms. However, in more recent times, domestic economy tailwinds and policy shifts, along with India’s focus on grabbing a larger piece of the global manufacturing pie have resulted in increasing leasing activity by Indian occupiers across the top seven cities. We analyse some cross-sectional trends across cities, sectors and time to understand the current and future landscape amid the rising importance of domestic occupiers in the India office market ecosystem.

Leasing share of domestic occupiers shows dramatic growth

We analysed the leasing volumes from 2017 to 1Q25 and split the period to pre-COVID (2017-2019) and post-COVID (2022-1Q25). The COVID affected period has been not considered to remove event-specific trend anomalies.

Domestic occupiers have clearly been the big movers and helped sustain and grow overall leasing volumes. They have combined across various sectors to account for a 46% share of the gross leasing activity recorded since 2022. This stands in contrast to a lower 35% share in the unaffected, three-year period between 2017-19. This is an indicator of the strong domestic economy spawning multiple business opportunities, allowing for home grown businesses and new startups to spring up.

In fact, since 2022, domestic firms have leased year-over-year more space in absolute terms, with the beginning of 2025 the harbinger of another strong performance from these occupiers.

While the trends in deal sizes haven’t varied much across the time periods being compared, it is interesting to note that on average, the shares of the mid (20,000 sq ft – up to 100,000 sq ft) and large sized deals (>100,000 sq ft) have risen on an expanding activity base, indicating larger space take-ups being preferred by domestic occupiers. While the flex segment is driven by larger enterprises creating managed space demand, other industry segments within the domestic occupier ecosystem are aiming to create efficiencies by consolidating operations or choosing a well-thought portfolio footprint strategy of core and cost-effective clusters within the main cities to house large centres.

Flex has replaced Tech as the biggest industry segment among domestic firms; BFSI makes a major shift in activity levels

India’s domestic occupier mapping by industry segments, presents a unique picture compared to the overall leasing pie. Homegrown flex operators have supplanted Tech as the biggest industry segment among domestic firms’ space take-up activity, accounting for a significant 36% share. Banking and Financial services firms have seen more than 50% jump in their market share, driven by large, regional HQ expansion and set-ups and the growing fintech industry. Tech hasn’t lost its market share by much and still accounts for 22% of domestic occupiers’ leasing volumes.

Average space leased by BFSI and Manufacturing shows the biggest growth; Flex takes up the biggest space per transaction

It is quite insightful to see that higher leasing activity by domestic firms in recent years is reflected in the average per deal size increasing substantially during the two periods under consideration. The flex segment has remained the one with the biggest average deal size and the same has grown by an impressive 35-45% as well, indicating the strong tailwinds of larger space needs of enterprises driving the growth in this segment. The biggest movers, however, have been the BFSI and manufacturing sectors, where the average office size has more than doubled over the years. This is reflective of BFSI firms looking to centralise or consolidate operations while a greater policy focus on manufacturing has supported bigger set-ups which have required more office space.

Delhi NCR and Mumbai are clear winners; tech cities benefitting from their tech ecosystem and flex demand

Multi-sectoral cities, with a vibrant office ecosystem driven by non-tech occupiers are unsurprisingly the ones that have seen intense activity levels from domestic firms over the past few years. While Delhi NCR sees domestic firms across a wide spectrum of industries, Mumbai is favoured by occupiers from the banking and financial services.

Delhi NCR leads in terms of its share among the top cities when it comes to leasing by domestic occupiers, though the share of activity had slightly dipped in the recent times. However, it is Mumbai that has displayed a significant jump with its share growing by ~62% in 2022-till date compared to the 2017-19 period. 

We see a clear demand demarcation when looking at industry segments across key cities. BFSI firms account for a consistent share of over 30% in Mumbai’s domestic occupier demand landscape, while in Delhi NCR’s case, flex holds a similar share, reiterating the difference in trends across these markets.

The tech cities are driven primarily by GCCs and global firms but still see healthy domestic occupier traction through flex and third-party, domestic tech occupiers. This is in line with the current demand landscape where flex is becoming a major player in the overall leasing pie. Flex in India is mostly growing from bootstrapped, domestic firms. For domestic tech firms, it is a no-brainer to continue to grow in tech talent-rich cities.

The domestic occupier landscape remains dynamic, reflected in the continued heightened levels of activity by flex and rising financial inclusion at a country level pushing the growth in domestic BFSI and fintech firms. As global firms keep India firmly in their eyesight as part of their business strategies, a host of local technology, consulting and manufacturing firms are also witnessing green shoots of growth as key partners to the former as they navigate the India market. An additional factor of growth is being contributed by domestic pharma-biotech, EPC, aviation and OEMs, riding the crest of the growth boom and making a push into global growth markets. India’s talent base, cost advantages and policy push which are providing an impetus to growth are also factors that make India a globally competitive country. Along with a thriving domestic public market, all these make up the bedrock from which domestic firms are springing to the next level.

We expect that the momentum that domestic firms are currently riding, will continue to support the rising leasing activity levels in the country, even as global firms remain the mainstay of the India office market. Both these together have the potential to push India’s leasing volumes to over 100 mn sq ft over the next 3-4 years.