Anarock Group has highlighted a widening divide in India’s commercial office market, with Grade A office spaces witnessing record leasing demand while mid-tier and secondary office assets continue to lose occupier interest.
According to Anarock, Grade A office leasing across the top seven cities touched a record 58.2 million sq ft in 2025, registering a 17% year-on-year growth, driven largely by corporate expansion, Global Capability Centres (GCCs) and improving leasing sentiment.
Southern markets continued to anchor demand
Anarock Group Managing Director – Commercial Leasing & Advisory Peush Jain said southern markets continued to anchor demand, with Bengaluru, Hyderabad and Chennai together accounting for nearly half of India’s total office absorption in 2025.
“Bengaluru remained the top contributor with 14.95 million sq ft, followed by Hyderabad at 8.5 million sq ft and Chennai at 5.9 million sq ft,” Jain said.
GCCs fuel premium office demand
The momentum has continued into 2026, with net office absorption rising 5% year-on-year to nearly 13.5 million sq ft in Q1 2026.
Anarock said GCCs accounted for 41% of total Grade A gross leasing in 2025, compared to 36% in 2024. Their share further increased to 47% in Q1 2026.
Premium office spaces in limelight
The report noted that multinational corporations and GCCs are increasingly favouring premium office spaces equipped with advanced infrastructure, sustainability certifications, wellness facilities and smart technologies.
“Occupiers are consistently moving towards Grade A assets whenever such alternatives are available in the same micro-market,” Jain said.
Vacancy pressure rises for mid-tier assets
Vacancy levels in Grade A offices across the top seven cities declined to 16.1% in 2025 from 16.5% a year earlier and further eased to 15.5% in Q1 2026.
Chennai emerged as the strongest market with vacancy dropping to 8.8%, the lowest since 2019.
In contrast, vacancy in older and secondary-grade office buildings remains significantly higher at 20-25%, reflecting weakening occupier demand.
According to Anarock, once companies upgrade to Grade A spaces, they rarely shift back to mid-tier properties, worsening vacancy levels in ageing office stock.
Rentals and supply continue to rise
Grade A office rentals increased 6% in 2025 to an average ₹92 per sq ft per month, rising further to ₹93 per sq ft in Q1 2026. Bengaluru recorded the highest rental growth, supported by strong GCC demand.
Developers too bet on premium assets
Developers are also continuing to bet heavily on premium office assets. The top seven cities added 52 million sq ft of Grade A office supply in 2025, up 8% year-on-year, led by Bengaluru, Chennai and Pune.
Anarock said the long-term outlook for Grade A offices remains strong, supported by expectations that India could host 2,200-2,300 GCCs generating $100-110 billion in value by 2030.