Commercial Space Demand Rises 11 Per Cent CAGR in Top 8 Cities Breakthrough

Equirus Capital, a Mumbai-based investment banking firm, has reported a 11% CAGR in commercial space demand in India’s top eight cities between 2020 and 2025. The growth is attributed to the cost-effectiveness of Bengaluru, which has a per FTE cost 81% lower than Tier-II US cities. India’s real estate sector is also thriving, with Bengaluru recording net absorption of 75.2 million sq ft between CY2016 and 9MCY2024. Indian metros offer world-class office spaces at competitive rates. The commercial real estate sector in India is undergoing a remarkable transformation, with demand in the top eight cities rising at a compound annual growth rate of 11 percent This steady rise signals not just an.

Increase in office absorption but also a shift in the way businesses, investors, and developers are approaching commercial properties. As technology, infrastructure, and workplace models evolve, these cities are positioning themselves as global hubs for business and innovation. India’s urban centers such as Bengaluru, Hyderabad, Delhi-NCR, Mumbai, Pune, Chennai, Kolkata, and Ahmedabad are witnessing unprecedented growth. The concentration of multinational corporations, startups ecosystems, and IT hubs in these regions has created a surge in the need for Grade-A office spaces and flexible work environments companies are expanding their footprint in these cities.

With Bengaluru and Hyderabad alone accounting for a significant share of new leases in recent years Alongside corporate expansions, government initiatives to improve infrastructure and digital connectivity have played a vital role. Projects under the Smart Cities Mission and improved metro rail networks in Delhi, Bengaluru, and Pune are making commercial hubs more accessible, thereby increasing their attractiveness for both employees and employers. For readers exploring related insights, you can check how (Real Estate) is reshaping workplace locations.

The Rise of Co-working and Flexible Workspaces

One of the most transformative shifts in India’s commercial property market has been the exponential growth of co-working and flexible workspaces. Initially viewed as a solution for startups, co-working has now become a mainstream choice for global enterprises and small businesses alike. Hybrid work models adopted post-pandemic have accelerated this trend, with companies preferring scalable and cost-efficient spaces Brands like WeWork, Awfis, and Smartworks are expanding rapidly, aligning with the demand from corporates looking for flexibility. This trend is not limited to metros alone Tier-2 cities are also witnessing increased co-working penetration. For a deeper dive, readers can explore our article on.

Commercial real estate in India continues to be a favoured investment class, drawing both domestic and global institutional investors. With yields outperforming many residential segments, private equity firms and Real Estate Investment Trusts (REITs) are expanding their portfolios in Grade-A office projects and business parks. According to (JLL India) India’s office market is set to attract multi-billion-dollar investments over the next five years, supported by the 11 percent CAGR in demand. The emergence of REITs has democratized investment opportunities, allowing retail investors to participate in commercial property growth. This marks a pivotal shift, turning real estate into a more liquid and transparent asset class. Investors can also look at broader.

City-Wise Growth Patterns

Each of the top eight cities contributes uniquely to the commercial property narrative. Bengaluru remains the leader, often referred to as the “Silicon Valley of India,” with its vast IT corridors and innovation clusters. Hyderabad follows closely, boosted by its HITEC City and strong government push toward tech infrastructure. Delhi-NCR, with Gurgaon and Noida at its core, thrives on multinational headquarters and a diverse corporate base. Mumbai continues to be the financial capital, attracting BFSI giants and global banks Meanwhile, Pune and Chennai have emerged as secondary IT hubs, while Kolkata and Ahmedabad are catching up with increasing demand in manufacturing.

Logistics, and services sectors. Together, these cities paint a picture of a balanced commercial growth trajectory, where no single market dominates but rather complements the others. As demand grows, the nature of commercial spaces is also evolving. Companies today are looking beyond square footage, seeking technologically enabled, sustainable, and employee-friendly environments. Smart buildings with energy-efficient designs, touchless technologies, and advanced HVAC systems are becoming standard. The move toward green certifications such as LEED and IGBC is further shaping the supply of office spaces This shift not only reflects global sustainability goals.

IT hubs, startups, flexible workspaces, and global investments, the commercial property market is seeing a steady surge in office absorption and co-working trends. Cities like Bengaluru, Hyderabad, Delhi-NCR, Mumbai, Pune, and Chennai are leading the charge with modern infrastructure, tech-driven spaces, and sustainable developments. This growth reflects strong corporate leasing, demand for premium workspaces, and the rise of hybrid working models. Investors, developers, and businesses are exploring opportunities in Grade-A office spaces, business parks, and commercial complexes. With robust infrastructure projects and improved connectivity, the commercial real estate.