Peak after peak... leasing of offices shows no fatigue

India's office property market scaled a fresh peak in 2024, clocking the third straight year of record leasing, aided by robust demand from multinationals for setting up global capability centres, and flexible workspace operators.

Leasing activity in the office market across the top six cities touched 66.4 million sq ft, up 14% from a year ago, showed data from real estate services firm Colliers India. Bengaluru drove Grade A office space demand, with the highest-ever leasing volume of 21.7 million sq ft, up 40%.

Hyderabad and Mumbai recorded leasing volume of 12.5 million sq ft and 10.0 million sq ft leasing, respectively. Both cities reported double-digit annual office space demand for the first time this calendar year. Delhi-NCR too saw healthy space uptake with Grade A demand nearly reaching the 10 million sq ft mark.

"Three out of the six major cities witnessed more than 10 million sq ft of annual leasing. Bengaluru especially witnessed remarkably strong demand of close to 22 million sq feet and accounted for one-third of the total space uptake in 2024. New supply during the year also remained above the 50 million sq ft mark and kept vacancy levels range bound," said Arpit Mehrotra, MD, Office Services, India, Colliers. Demand in 2025 can potentially stabilise at elevated levels and annual space uptake exceeding 60 million sq feet is likely to be the new norm over the next few years, he added.

On the supply side, new completions touched to 53.3 million sq ft for the year, a 6% rise from 2023. Flex space demand hit a record 12.5 million sq feet, a 45% growth from last year.

Flex spaces comprised nearly a fifth of Grade A space uptake in 2024. "Flex operators accounted for almost 20% of the India office space demand in 2024, up from 5-15% share in each of the years starting 2020. The occupier preference for managed office spaces augurs well for leading operators, who are likely to increasingly foray into Tier-II/III cities throughout 2025 and expedite their fundraising plans through primary markets as well," said Vimal Nadar, senior director and head of research, Colliers India.

BFSI and engineering & manufacturing sectors too demonstrated healthy leasing activity, both crossing the 10 million sq feet leasing in 2024. Notably, large-sized deals of more than 100,000 sq feet continued to drive leasing activity and contributed to 54% of total demand in 2024. Large-sized deals were particularly preferred by occupiers from the technology sector and flex spaces as well.