India’s office market tilts decisively toward Grade A as premium spaces dominate demand

New Delhi: Rentals in Grade A offices cost up to 20% more than in their mid-tier counterparts, as occupiers are preferring better facilities and willing to pay for it.

Anarock data indicate that average monthly Grade A rentals increased by 6% in 2025 to Rs 92 per sq. ft. In Q1 2026, average office monthly rentals across the top 7 cities rose further to Rs 93 per sq. ft.

Bengaluru recorded the highest growth of 9% YoY in 2025 against 2024, and the city continued this trend by recording the highest (11%) growth in Q1 2026 against the preceding quarter (Q4 2025).


“India’s Grade A office market had its best year on record in 2025. According to ANAROCK Research, net leasing across the top 7 cities accelerated to 58.2 million sq. ft. registering 17% YoY growth. This broad-based momentum sustained throughout all four quarters on the back of companies' expansion, GCC scaling and an improving leasing environment,” said Peush Jain, Managing Director - Commercial Leasing & Advisory, ANAROCK Group.

The premium is being paid because GCCs, MNCs and institutional occupiers mainly prefer Grade A. Multinational corporations insist on LEED and IGBC certifications, effectively ruling out most mid-tier buildings from consideration - even with good location attributes.

The Indian commercial office real estate market is bifurcating - while Grade A office leasing has hit record highs in the top 7 cities of the country, mid-tier and secondary stock is increasingly being neglected by economics as well as a structural shift in the occupier profile driving office market demand.

"India’s office market growth is increasingly being concentrated around high-quality commercial ecosystems. Delhi-NCR is emerging as one of the biggest beneficiaries of this transition. The fact that MNCs have contributed to the robust share of office space leasing in NCR over the past two years for their GCC projects speaks volumes about the increasing faith that occupiers have in the region,” said Sandeep Chhillar, Founder and Chairman, Landmark Group.

The demand for Grade A office spaces, particularly in Gurugram, is driven by the modern requirement for comprehensive infrastructure. Other drivers include sustainability certifications, building management systems, and an environment conducive to employees.

Micro-markets such as Golf Course Extension Road are witnessing heightened interest from occupiers who are seeking premium Grade A developments. Companies today are prioritising locations that offer seamless connectivity, high-quality infrastructure, and sustainable workspaces.

“Vacancy levels in Grade A offices across major cities have steadily improved to nearly 15.5%, reflecting strong absorption driven by GCC & Flex Office expansion, and sustained corporate growth. Businesses today are prioritising workplaces that offer scalability, advanced digital infrastructure, ESG compliance, and seamless connectivity through expanding metro networks,” said Harinder Singh Hora, Founder Chairman, Reach Group.

Grade A gross leasing in the top 7 cities saw GCCs contributing 41% in 2025, up from 36% in 2024, while in Q1 2026 the share increased to 47% of the total gross leasing of nearly 21.12 Mn sq. ft.

"In Delhi-NCR alone, MNCs leased almost 51 lakh sq. ft. till early 2025 over two years - exclusively to establish up GCC campuses. The fact that accurate aggregate data on mid-tier leasing volumes is lacking reflects the fragmented, mostly unorganised structure of this side of the CRE industry,” Jain said.

Vacancy in Grade A offices in the top 7 cities declined to 16.1% in 2025 from 16.5% in 2024, with all but one city registering reductions. Chennai was the top performer, with a mere 8.8% vacancy rate – its lowest since 2019. Hyderabad too, registering the highest vacancy rate at 26.3%, saw a marginal fall of 0.2% YoY, suggesting that absorption has been constant despite the addition of new supply.

In Q1 2026, Grade A office vacancy rates have shrunk further to 15.50% across the top 7 cities. For mid-sized office buildings, the structural dynamics are worse. Vacancy in older, secondary-grade buildings tends to be both higher and more persistent, clocking in at anywhere between 20-25%.

The lack of competition for mid-tier projects will further increase as domestic REITs and global investors pour funds into Grade A development.