Road Ahead For Commercial Realty

Vinod Behl

The year 2025 will see several distinct trends gaining momentum that are set to redefine commercial real estate- office and retail.

Office Retail Complexes 

Amidst lack of enough quality stand alone  retail spaces, mixed use formats are becoming popular. The format of Office Retail Complexes (ORCs) popularised by Cyber City in Gurgaon and UB City in Bangalore is now catching up. In 2025, this trend prevalent in Tier 1 cities, will gain further momentum  as the success of modern business districts now depends on integrated  corporate office buildings as more and  more office goers are looking out for leisure,entertainment and F&B as part of office complexes for meeting and relaxing purposes.

Grade A Green Offices   

The office real estate is seeing the strong trend of occupiers increasingly opting for Grade A green offices even if they have to pay a premium for it. Sixty six percent of new office supply till September 2024 was green certified. In 2025, this trend will gain traction with an estimated 40% of total office space being green certified. Seeing the rising demand for green office buildings, more and more developers will be retrofitting older buildings by incorporating sustainable elements into design and integrating biophilic design elements like natural lighting and plants to improve employee wellbeing and productivity.Going forward, we will be seeing 300-350 msf of old commercial buildings getting refurbished.

Indian Companies   –  New Leaders in Leasing

The new year will see a significant shift  in office leasing with the old trend of MNCs dominating leasing volumes getting reversed in favour of  Indian companies. In 2024, 42% of office space absorption was by domestic companies, particularly IT firms, flexible space operators and banks. Between 2024 and 2025 , we will have 60-65 msf of office space getting leased.

Flex & GCC s to Retain Supremacy

This year we will see flex and GCCs maintaining their dominance in leasing. Strong flex space demand that led to a record annual absorption of 12.5 msf (45% growth in 2024, will reach 81 msf by 2025, registering a 52% increase. Flex office segment will make up about 25% of the overall office space absorption. Similarly, GCCs will continue their record run with expected leasing of 45-50 msf- about 40% of the total office space demand in top 6 cities.

Refurbishing Retail Centres

In 2025 , we will see the increasing trend of refurbishing old underperforming shopping centres. There is huge potential for it as there has been a 59% YoY increase in low performing shopping malls with nearly 13.3 msf of retail space across 64 malls across 8 cities  categorised as ghost malls. NCR accounts for the highest ghost mall space of 5.3 msf. Going forward, besides changing the architecture, layout and  decor of dead malls to revive them, we will also see them getting redeveloped as office complexes or as mixed use developments.

Shrinking Space For Multiplexes

As cinema led revenue shrinks in  malls, we will see  cuts in multiplex space in shopping centres . Moreover, about 3% reduction in footfall generated by cineplexes  has forced developers for a rethink in terms of  rationalising mall space and allocating some of it to alternate forms of entertainment including family entertainment centres.

Integrating Community Space in Malls  

One distinct trend shaping mall environments will be reimagining mall space as a community space as retailers seek to create immersive and engaging shopping experiences in order to attract a broader and more diverse customer base. Going forward we will see the creation of multi-use spaces in malls , transforming retail hubs into social destinations with community and recreational  spaces to hold different kinds of events for social interactions.