Strong leasing activity in the first three quarters of 2024 has pushed Grade A office space demand to 46.7 million sq ft across the top six cities of the country. Building on the momentum in the first half of the year, Q3 2024 saw space take-up to the tune of 17.3 million sq ft, a 31% year-over-year (YoY) growth, Colliers stated in its latest report.
Bengaluru and Hyderabad accounted for over half of the leasing activity during this period. Bengaluru registered its highest ever leasing in any quarter at 6.3 million sq ft, continuing its dominance in the office market. Pune, notably, with 2.6 million sq ft of leasing activity, recorded 2.6X times space take-up compared to Q3 2023.
With 14.4 million sq ft of completions in Q3 2024, overall new supply too followed the demand growth trajectory, registering 33% increase YoY. Bengaluru and Hyderabad together saw 64% of the quarter’s new supply. Delhi-NCR also saw its highest quarterly supply infusion in the last 8 quarters, at 3.3 million sq ft. Within Delhi-NCR, South Delhi micro market with few significant project completions, accounted for almost 70% of the incremental supply of the city in Q3 2024.
“Office demand across different markets and sectors has been impressive in the last 2-3 years, aiding overall leasing reach new highs each passing year. Interestingly, 2024 saw consecutive quarters of high growth in demand and supply. Office space demand in Bengaluru, Hyderabad and Mumbai have reached close to or surpassed 2023 demand levels in the first three quarters of 2024. Occupier confidence is reflected in continued higher uptake of large-sized deals of more than 1 lakh sq ft, accounting for 65% of total leasing in Q3 2024. Bengaluru saw 81% of its leasing through large-sized deals, while Pune followed closely with 71%, driven by the Tech and BFSI sectors,” says Arpit Mehrotra, Managing Director, Office Services, India, Colliers.
Technology sector drove around one-fourth of the overall office space demand during the quarter, followed by BFSI occupiers and Flex space operators. Interestingly, Bengaluru and Pune surpassed Mumbai in BFSI leasing, and accounted for 39% and 25% share respectively in overall BFSI leasing during the quarter. Flex spaces too saw significant leasing of 3.4 million sq ft in Q3 2024 and accounted for almost 20% share in overall leasing. Select micro markets such as SBD 1 in Bengaluru, Golf Course Road in Delhi NCR, CBD in Pune and SBD in Hyderabad accounted for about 54% of the leasing by flex space operators in Q3 2024[1].
India’s Office Space Demand Set To Surge: Engineering & Manufacturing And BFSI Sectors To Drive Major Growth
“2024 has already seen impressive flex space leasing, totalling to 7.9 million sq ft—a 20% year-on-year increase. Flex space recorded a new high of 3.4 million sq ft space taken up during Q3 2024; surpassing the previous high of 2.6 million sq ft. Delhi-NCR and Bengaluru were the dominant flex space markets, collectively accounting for 55% of the demand this year. Notably, nearly half of the leasing by flex space operators was driven by large-sized deals exceeding 1 lakh sq ft, indicating a growing demand from large enterprises gaining scale.”, says Vimal Nadar, Senior Director and Head of Research, Colliers India.