Office Space
India’s top six cities are projected to achieve office space leasing of 66.4 million sq ft in 2024, marking a significant 14% year-on-year growth in leasing activity. Bengaluru is set to dominate the market with a record-breaking absorption of 21.7 million sq ft, reflecting a robust 40% annual increase, as per a report by real estate consultancy Colliers released on December 24.
Hyderabad and Mumbai are also poised for impressive growth, with expected leasing volumes of 12.5 million sq ft and 10 million sq ft, respectively. Both cities are anticipated to experience double-digit increases in office space demand for the first time.
Record-Breaking Demand for Grade A Office Space
The report highlights an unprecedented demand for Grade A office spaces across India. Total leasing activity in 2024 reached 66.4 million sq ft, with three of the six major cities surpassing 10 million sq ft in annual leasing. New office space supply exceeded 50 million sq ft, maintaining vacancy levels within a stable range.
“India’s Grade A office space demand has reached historic highs, with annual leasing activity surpassing expectations. Moving forward, demand is likely to stabilize above 60 million sq ft annually, setting a new benchmark,” said Arpit Mehrotra, Managing Director, Office Services, India, Colliers.
Chennai, Delhi-NCR, and Pune See Leasing Declines
The October-December quarter is projected to contribute the highest leasing activity in 2024, with 19.7 million sq ft absorbed, a 14% rise compared to the previous quarter.
However, Chennai’s leasing activity is expected to decline by 56% in Q4 2024, with only 1.9 million sq ft absorbed, down from 4.3 million sq ft a year earlier. Delhi-NCR and Pune will also see quarterly leasing drops of 7% and 35%, respectively. On an annual basis, Chennai and Delhi-NCR are likely to witness declines of 35% and 16% in office leasing activity.
Despite these challenges, Hyderabad and Bengaluru are projected to drive the market during Q4 2024, accounting for 54% of India’s leasing activity in the quarter. Bengaluru recorded the highest quarterly leasing at 6.6 million sq ft, while Mumbai and Hyderabad saw the largest quarter-on-quarter growth at 71% and 41%, respectively.
Flex Space Leasing Achieves New Milestones
The demand for flexible office spaces has surged to record levels, with 4.7 million sq ft leased in Q4 2024—the highest quarterly absorption to date. Flex spaces accounted for 24% of Grade A leasing activity during the quarter, culminating in an annual total of 12.5 million sq ft, representing a 45% year-on-year growth.
“Flex spaces have emerged as a dominant segment, contributing nearly 20% of India’s office space demand in 2024,” said Vimal Nadar, Senior Director and Head of Research at Colliers India. “This marks a dramatic increase from the 5%-15% share recorded in previous years since 2020.”
The technology sector continued to lead office space demand, representing nearly 25% of the total leasing activity in 2024. Additionally, the BFSI and engineering and manufacturing sectors demonstrated solid performance, with both surpassing 10 million sq ft in leasing activity.
Future Outlook
Flex space activity has grown significantly in recent years, with Delhi-NCR and Bengaluru collectively accounting for over half of the total flex space leasing in 2024. As the market evolves, the annual demand for office spaces is expected to remain robust, with flex operators playing a pivotal role in shaping the future of India’s commercial real estate sector.
Chirag Singh is a content writer with a focus on real estate, covering topics like News, Guidance, Tips, Property trends and Investments. He has written for various platforms, providing helpful insights to readers. With a background in real estate, Chirag combines his knowledge and passion for real estate in his work. He enjoys staying updated on the latest industry trends.
