Office space owners are looking at good times ahead as rentals are expected to rise due to demand for Grade A office spaces outpacing supply that has been sluggish due to construction delays, long gestation periods and developers’ interests shifting to residential.
Image used for representation purpose only. Photograph: Adnan Abidi/Reuters
Recent office demand has been driven by global capability centres (GCCs), flex space operators, and domestic businesses.
But since 2021, new completions have lagged behind strong leasing activity, pushing vacancy rates lower.
For instance, office space is hard to find in central and secondary business districts across cities as vacancy rates stand at low single-digits.
Submarkets such as BKC (Mumbai), Prime NH-8 (Gurgaon), ORR (Bengaluru), Hitec City, SBD East-Pune, and SBD OMR-Chennai are seeing tighter vacancies between 5-10 per cent, said Samantak Das, chief economist & head of research & REIS, India, JLL.
“Vacancy rates don’t tell the full story. Much of the available space is outdated or doesn’t meet modern occupier needs.
"The real gap is in well-located, high-quality, enterprise-ready space,” said Kunal Mehra, president & co-CEO, Table Space. Construction delays due to regulatory hurdles, supply chain issues, and rising costs have further limited the availability of quality space.
According to Knight Frank, only 53 per cent of total office stock is grade A, indicating a large share of space fails to meet global standards in design, ESG compliance, and tech readiness.
“Developers are ramping up new grade A supply to meet this growing demand,” said Anuj Puri, chairperson, Anarock.
This imbalance has shifted market power to land owners, driving up rents despite global uncertainties.
According to Knight Frank, all major markets recorded rental growth. Mumbai saw 12 per cent growth, NCR 8 per cent, and Bengaluru 7 per cent.
Average rentals in Mumbai stood at Rs 129 per square foot per month, while those in NCR stood at Rs 94 per square foot per month, as of June 2025.
“There is huge interest in Mumbai from companies expanding here. In the coming time, rents will go through the roof. I hope there will be some rationalisation, and the supply has to increase for that.
"There are unreasonable rents in some micro-markets,” said Boman Irani, chairman and managing director, Rustomjee Group, which is venturing into office spaces.
“India has consistently seen 75-80 million square feet (msf) of gross leasing and 50 million sq ft of net absorption, but supply is only 40-50 million sq ft annually.
"There’s a significant gap between demand and supply,” said Anshul Jain, CEO, India, SEA & APAC tenant representation, Cushman & Wakefield.
A key reason behind this shortage is being attributed to developers’ focus increasing on residential projects, post-Covid, attracted by faster sales, quicker returns, and easier financing through pre-bookings.
In contrast, commercial projects require upfront capital, longer timelines, and post-construction leasing, making them more complex.
“One has to understand this business, have deep, even global relationships.
"A lot of developers prefer the easier route, residential,” said Alok Aggarwal, MD & CEO, Brookfield India Real Estate Trust (Reit).
He added that demand is high in micro markets near talent hubs, while supply is skewed toward infill micro-markets and often uneven.
The lack of immediate supply is prompting forward leasing deals, with companies signing up for buildings set to be completed in 2026-2027, said Gulam Zia, senior executive director, research, advisory, infrastructure, and valuation Knight Frank.
A spokesperson from an established Reit added, “Residential is so attractive now that if a developer can choose between office and housing, they prefer residential. Hence, office supply suffers.”
Some analysts noted that, in certain cases, land initially zoned for commercial use has been redirected for residential projects.
“Demand has really shot up since H2FY24, but supply takes time. Commercial projects have longer tenures and can’t start and stop like residential,” one analyst noted.
Apple rents 270K sq ft office space in B'luru, to pay Rs 1K cr in 10 years
Apple India Private Limited has inked a lease agreement for a 2.7 lakh sq ft office space in Embassy Zenith, located on Sankey Road in the upscale Vasanth Nagar area of Bengaluru. The 10-year lease has a total rental outlay of Rs 1,010 crore.
This will be Apple's second office in India's tech hub and could be its largest, housing more than 1,200 people, according to industry watchers.
It may also become one of the largest single-tenant office leases in Bengaluru's commercial real estate market.
According to lease documents from Propstack, the terms of the lease specify that Apple India will occupy the 5th to 13th floors of Embassy Zenith, covering a substantial carpet area of 196,179 sq ft, or 268,737 sq ft including chargeable area.
The monthly rent is Rs 6.315 crore, translating to an effective rate of Rs 235 per square foot.
The lease includes an annual escalation clause of 4.5 per cent, which allows for steady upward revision in rent throughout the lease term.
To secure the lease, Apple has deposited Rs 31.57 crore as a security amount, as per the agreement.
In addition to base rent, the lease agreement includes payments for maintenance of common areas and car parking facilities, which contribute to the total cost burden borne by the company.
Detailed financial disclosures indicate that Apple India will pay approximately Rs 1,010 crore over 10 years, covering rent, car park charges, and common area maintenance (CAM) fees.
Apple has also expressed interest in potential future expansion within the same building, with plans to lease the ground to fourth floors as well.
This additional area measures around 121,203 sq ft, which would nearly double their office footprint, bringing it to nearly 4 lakh sq ft.
The building is owned by Mac Charles (India) Limited, affiliated with Embassy Group, a major player in Bengaluru's commercial property development sector.
Queries to Apple and Embassy Group did not elicit a response as of Sunday night.
In 2021, Apple leased 1.16 lakh sq ft at a monthly rental of Rs 2.43 crore in Prestige Minsk Square, a commercial building located on Cubbon Road in central Bengaluru, where it began operations in 2023.
This office space expansion is part of Apple's large-scale plans to increase production in India and open four more retail stores in Bengaluru and Pune, in addition to stores in Delhi-NCR and Mumbai, as well as its two marquee stores in Mumbai and Delhi opened in 2023.
The US-based technology giant has also leased more than 12,600 sq ft in Oberoi Sky City Mall, Borivali, in May and about 8,000 sq ft in Batrayanpura, Bengaluru.
BS Reporter
Table Space leases 5.34 lakh sq ft in Gurugram, to sublease to Google
Bengaluru-based managed workspace provider Table Space has leased around 534,000 square feet in Gurugram, with plans to sublease the property to tech giant Google at a monthly rent of Rs 3.47 crore, according to a Propstack document.
The space is in Tower 2 of Intellion IT Park, a commercial project developed by Tata Realty’s Mikado Realtors.
The project is located in Golf Course Extension, near Sector 59, Gurugram.
Karan Chopra, chairman and co-chief executive officer (CEO), Table Space, said, “At Table Space, we are building one of the largest portfolios of enterprise-managed workspaces in India.
"Our recent lease at Intellion Park underscores the strong momentum we see from global capability centres (GCCs) and large enterprises expanding rapidly in India and seeking Grade A, tech-enabled offices. Leveraging our scale and proven track record, we have become the partner of choice for global occupiers seeking premium enterprise managed workspaces.
"However, for reasons of confidentiality, we do not comment on individual client engagements.”
The lease agreement was executed on July 25 for a tenure of 72 months.
Table Space has paid a deposit of Rs 1.42 crore, with a rental escalation of 15 per cent every three years.
According to the document, the leased area spans the ground floor and 12 upper floors, at a monthly rate of Rs 65 per square foot.
Google’s competitors, including Yahoo, Microsoft, Amazon, Facebook, Apple, and others, also have a presence at Intellion Park.
Google did not respond to Business Standard’s query.
Additionally, in January 2025, Google leased about 550,000 square feet from a shared workspace provider at Cyber City Extension, DLF Downtown in Gurugram.
Earlier, in 2022, the company had exited a 700,000 sq ft lease in Gurugra’s Vatika office park, which it had leased in 2020.
This was due to delay in handing over possession and not following terms of the contract, according to an Economic Times report.
Beyond Gurugram, the tech giant earlier this year renewed its lease for around 870,000 sq ft of office space in Bengaluru for another five years, at a monthly rent of Rs 7.5 crore (Rs 90 crore annually).
The office space spans two adjacent towers at Bagmane Capital Business Park — Kyoto East and Kyoto West.
It is located near Google Ananta, the company’s largest and fourth campus in India, with a seating capacity of 5,000 employees.
Currently, Google has about six offices in the country — two in Bengaluru, and one each in Gurgaon, Hyderabad, Mumbai and Pune.
A recent Knight Frank report noted that India’s total office stock is expected to surpass 1 billion square feet by 2025.
This is against less than 200 million square feet in the early 2000s.
The current stock is valued at about Rs 16 trillion ($187 billion).
At a compound annual growth rate (CAGR) of 12.7 per cent, India could double this to 2 billion square feet by 2036.
Even at a more modest 10.9 per cent CAGR, the milestone would be achieved by 2041.
This sustained expansion is underpinned by GDP growth, urbanisation, and increasing formalisation.
By Aneeka Chatterjee
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