Overview
The office market in India has reached a historic milestone in 2024, with total leasing activity across the top six cities surpassing 66.4 million square feet, reflecting a robust 14% year-on-year growth. Bengaluru was the driving force behind this growth, achieving its highest-ever leasing volume of 21.7 million square feet, marking a remarkable 40% increase in demand from the previous year.
Hyderabad and Mumbai also saw significant demand growth, with both cities leasing over 10 million square feet of Grade A office space in 2024—12.5 million and 10.0 million square feet, respectively. This is the first time both cities have reached double-digit leasing figures. Delhi-NCR also showed strong demand, with Grade A leasing nearly touching the 10 million square feet mark.
The overall demand in major cities has set new benchmarks for office leasing in India, signaling a healthy and dynamic office market.
Strong Q4 Boosts Record Leasing Activity
Leasing demand in 2024 was consistent throughout the year, with each quarter surpassing the previous one. The final quarter of 2024, in particular, saw the highest leasing activity of the year, with 19.7 million square feet leased, reflecting a 14% increase from Q3.
Bengaluru and Hyderabad were the leaders in Q4 leasing, contributing to 54% of the national leasing volume. Bengaluru recorded the highest quarterly leasing at 6.6 million square feet, while Mumbai and Hyderabad experienced the strongest quarter-over-quarter growth, with increases of 71% and 41%, respectively.
Flex Space Leasing Breaks Records
2024 was also a standout year for flex spaces. In Q4, flex space leasing reached a record high of 4.7 million square feet, representing 24% of the total Grade A space uptake during the quarter. The strong demand for flex spaces throughout the year led to an annual absorption of 12.5 million square feet, a 45% year-on-year increase.
Technology sectors continued to lead demand for office space, accounting for almost one-quarter of total leasing activity. However, flex spaces now represent almost one-fifth of the Grade A space uptake in 2024. The BFSI and engineering & manufacturing sectors also showed robust leasing activity, each crossing the 10 million square feet mark for the first time.
Large-sized deals (≥100,000 square feet) continued to dominate leasing, contributing 54% of total demand in 2024, with technology and flex space occupiers being the primary drivers.
Supply and Vacancy Trends in 2024
On the supply side, 2024 saw 53.3 million square feet of new office completions, a 6% increase from 2023. Bengaluru and Hyderabad were the largest contributors, accounting for 54% of the new supply. With demand outpacing supply across most cities, vacancy levels across India dropped by 80 basis points compared to the previous year.
Rental prices also increased by 5% on a year-over-year basis, driven by strong demand for both new and existing office spaces.
Conclusion
The office leasing market in India reached new heights in 2024, with Bengaluru leading the charge and Hyderabad and Mumbai showing remarkable growth. Flex space leasing was particularly strong, contributing to a record year. As demand continues to outpace supply, vacancy rates have declined, and rental rates have increased, signaling a positive outlook for the office market moving into 2025
