The Indian office space market witnessed remarkable growth in the first three quarters of 2024, with a total of 46.7 million square feet (msf) of Grade A office space leased across the top six cities. This represents a 23 per cent year-on-year (YoY) increase, underscoring the robust demand for commercial real estate, especially in major tech hubs like Bengaluru and Hyderabad. The third quarter (Q3) alone saw a leasing activity of 17.3 msf, a 31 per cent YoY rise compared to Q3 2023.
According to the latest report by Colliers India, Bengaluru and Hyderabad were the star performers, collectively accounting for over half of the total office space uptake during Q3 2024. Bengaluru, in particular, set a record with 6.3 msf leased in a single quarter, continuing its dominance in the Indian office market. Pune also showed significant growth, with 2.6 msf of office space leased — 2.6 times the take-up recorded in Q3 2023.
This surge in office demand was complemented by a substantial increase in new supply. A total of 14.4 msf of Grade A office space was completed in Q3 2024, marking a 33 per cent YoY increase. Bengaluru and Hyderabad together accounted for 64 per cent of this new supply. The Delhi-NCR region also saw its highest quarterly supply addition in the past two years, with 3.3 msf of new completions, driven largely by new projects in South Delhi, which accounted for 70 per cent of the city’s supply growth.
Technology and BFSI Drive Leasing Demand; Flex Space on the Rise
The technology and BFSI (Banking, Financial Services, and Insurance) sectors continued to lead office space demand. The technology sector alone accounted for around one-quarter of the total office space absorbed in Q3 2024. Meanwhile, BFSI leasing activity grew significantly, particularly in Bengaluru and Pune, which collectively represented 64 per cent of the total BFSI leasing. Flex space, which has seen increasing popularity in recent years, touched new highs in Q3 2024, with 3.4 msf leased. Flex space operators now account for nearly 20 per cent of the total leasing activity, reflecting the growing demand for flexible workspaces, especially in prime micro-markets such as Bengaluru’s Secondary Business District (SBD) and Delhi-NCR’s Golf Course Road.
Vimal Nadar, Senior Director and Head of Research at Colliers India, noted, “Flex space leasing has seen unprecedented growth, reaching 7.9 msf so far in 2024—a 20 per cent YoY increase. Nearly half of this demand is driven by large deals exceeding 100,000 square feet, indicating a growing appetite from large enterprises.”
Developer Confidence Evident in Supply Surge
The surge in demand for office space is matched by developer confidence, as seen in the increase in new supply across key markets. Bengaluru registered the highest supply growth with 4.9 msf of new office completions in Q3 2024, a 69 per cent YoY rise. Other cities such as Pune and Mumbai also saw notable increases in new supply, with Mumbai registering a 100 per cent YoY growth and Pune growing by 86 per cent.
Interestingly, Delhi-NCR, which had seen a relatively low supply of office space in the previous quarters, recorded a significant boost in Q3 2024. With 3.3 msf of new completions, the city marked its highest supply infusion in eight quarters, signaling renewed confidence among developers. The South Delhi micro-market played a crucial role in this supply addition, contributing nearly 70 per cent of the new stock.
Major Deals and Key Transactions
Several large deals were struck during Q3 2024, underscoring the growing demand for sizable office spaces. Notable transactions included BNY Mellon leasing 916,200 square feet at Prestige Alphatech in Pune’s Kharadi, while Salesforce secured 640,000 square feet at Bagmane Capital in Bengaluru. Walmart followed suit with a lease of 587,600 square feet at Prestige Tech Pacific, also in Bengaluru. In Delhi-NCR, Smartworks, a prominent flex space operator, took up 480,000 square feet at DLF AMEX Tower, and Natwest Group leased 369,000 square feet at Bagmane Constellation in Bengaluru. These significant transactions highlight the continued confidence of major corporations in India's commercial real estate sector.
City-Wise Office Space Absorption Trends
Bengaluru and Hyderabad remained the top-performing cities in terms of both demand and supply. Bengaluru saw an 85 per cent YoY increase in gross absorption, with 6.3 msf leased in Q3 2024, while Hyderabad experienced a 16 per cent growth, absorbing 2.9 msf. Pune also had a standout performance with a 160 per cent YoY increase in leasing activity, driven primarily by the BFSI and technology sectors.
However, not all cities saw positive growth. Chennai and Delhi-NCR witnessed declines in leasing activity. Chennai’s office space take-up remained flat at 1.4 msf in Q3 2024, while Delhi-NCR saw a 25 per cent YoY decline, with gross absorption falling to 2.4 msf.
Outlook for 2024 and Beyond
The sustained demand for large office spaces, coupled with a steady rise in new supply, paints a positive picture for the Indian office market going forward. According to Arpit Mehrotra, Managing Director of Office Services at Colliers India, “The office market has been on a strong growth trajectory for the last 2-3 years. With 2024 witnessing consecutive quarters of high demand and supply growth, cities like Bengaluru, Hyderabad, and Mumbai are set to close the year on a high note.”
As the market continues to evolve, demand for flexible workspaces and large-sized office deals is expected to remain strong, especially from tech giants and BFSI players. The sustained confidence in the office sector is also likely to keep vacancy levels steady, with overall vacancy rates hovering around 17 per cent across major markets at the end of Q3 2024.
With such impressive growth figures, the Indian office space market is poised for a robust finish in 2024, positioning it as one of the most resilient commercial real estate markets globally.
