India’s Office Leasing Market: Demand Could Exceed 70 Million Square Feet in 2024

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India’s office leasing market continues to display remarkable strength and resilience, with pan-India leasing volumes in the first quarter of 2024-25 surpassing the 20 million square feet (MSF) mark for the third time since the COVID-19 pandemic.

Where are the big deals being signed?

India has set a new record for the office real estate market in 2024, reflecting heightened activity and confidence among occupiers and investors.

According to several reports, large office space deals across key cities, particularly by multinational corporations, were a significant driver of this robust leasing activity.

India’s Silicon Valley, Bengaluru, has emerged as the leading market, contributing substantially to pan-India fresh demand with numerous large deals closing in the city.

Other major metropolitan areas, including Mumbai, Delhi NCR, and Hyderabad, also reported strong lease transactions, underscoring the widespread growth in office leasing.

The strong year-on-year growth in fresh demand at a pan-India level indicates that occupiers are moving decisively with planned leases, underscoring the overall strength of the office market.

Office space demand-supply dynamics

In response to strong occupier demand, supply in the first quarter this year (Q1 2024) saw robust annual expansion. Real estate developers have expedited project completions to meet this demand, leading to a rise in speculative supply across major cities. Occupiers are prioritizing premium Grade A office spaces, driving the demand for top-tier office infrastructure for their employees. Hyderabad led the supply additions in Q1 2024, followed closely by Bengaluru and Delhi NCR.

The supply pipeline remains strong, with Bengaluru and Hyderabad together accounting for over half of the expected supply for the year. While the influx of new supply is likely to raise the pan-India headline vacancy rate, rental prices are projected to remain stable, reflecting a balanced market.

Who is driving up the demand for office space in India?

A survey by Colliers estimates that in a few high-end micromarkets, premium new office spaces can fetch up to 20 percent more in rental premiums than average quoted rates. India’s demand for office space is driven by Global Capability Centers (GCCs), which accounted for 37 percent of all lease activity in the first quarter of 2024. Metropolitan cities such as Hyderabad and Bengaluru have significantly fueled activity in the office industry. In Q1 2024, these two regions accounted for around half of the leasing activity and three-fourths of the new supply.

Various industry reports indicate that occupants in the Asia-Pacific (APAC) region are prepared to pay higher rent in exchange for better-quality workspaces. Similarly, in the steadily growing Indian market, occupants share these views. The strong momentum in India is resulting in more local companies occupying available space. Additionally, leasing activity is expected to receive a further boost this year due to the resilience of the US economy, despite potential recessionary concerns.

Projected surge in demand for 2024

As per another industry report, India’s office leasing demand is projected to exceed 70 million square feet in 2024, signaling a notable rise in commercial real estate activity. Several factors are driving this surge, including the expansion plans of multinational corporations, the emergence of startups, and the increasing adoption of flexible workspace solutions. As businesses adapt to evolving work models and seize new opportunities, demand for office space remains robust across key metropolitan areas.

Within the same report, data shows that for the 2023 calendar year, net office space leasing in India was 41.1 million square feet, while gross office leasing across the top 8 cities reached a record 74.6 million square feet.
In 2019, India saw the most net absorption, which was estimated to be 44 million square feet.


Given its ability to produce consistent long-term returns, institutional investors are expected to continue to be drawn to the office market in India. In recent years, the flex-office segment has greatly benefited from a robust demand from IT/ITES for managed offices from both domestic and multinational businesses. Cushman and Wakefield note in their report: “Healthy demand for managed offices from multinational and domestic enterprises has provided a massive tailwind to the flex sector in the past couple of years. Flex operators will remain one of key drivers of pan India leasing activity in the near to medium term on the back of continued expansion in the managed offices take-up.”

Over the next three years, major technology hubs like Bengaluru and Hyderabad are predicted to lead the way in project completions for office space. While the high demand for premium office space in desirable locations will likely keep vacancies in prime micromarkets rangebound, headline jobs across India are expected to rise as a result of the significant supply addition.

The growth of the technology sector, along with rising demand for shared office spaces and co-working facilities, is further fueling the expansion of India’s office leasing market. Additionally, government initiatives to promote business growth and investment are enhancing confidence among both domestic and international investors, contributing to the vitality of the commercial real estate sector.

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