India’s commercial real estate market is experiencing significant growth, particularly in large office space leasing, according to a new report by Knight Frank India. Transactions for office spaces exceeding 100,000 square feet saw a remarkable 54% year-on-year increase in the first half of 2024 compared to the same period in 2023.

Large office spaces accounted for 45% of all commercial property transactions across eight major Indian cities: Bengaluru, Ahmedabad, Chennai, Hyderabad, Kolkata, Mumbai, the National Capital Region (NCR), and Pune. This surge highlights the growing demand from global corporations and expanding sectors.

Bengaluru Takes the Lead

Bengaluru emerged as the top city for large office space transactions, recording 4.5 million square feet of leased space in the first half of 2024, a significant jump from 3.4 million square feet in the same period last year. This 32% increase underscores Bengaluru’s status as a thriving hub for tech companies and multinational corporations seeking to expand their presence in India.

Mid-Sized Office Spaces on the Rise

The mid-segment office space category, covering spaces between 50,000 and 100,000 square feet, also experienced strong growth. Leasing activity in this segment saw a 70% year-on-year increase, reaching 7.28 million square feet in H1 2024. Mumbai and NCR led the charge, each recording 1.57 million square feet of leased mid-sized spaces, followed by Hyderabad with 1.29 million square feet.

Steady Demand for Small Office Spaces

While large and mid-sized spaces dominated the market, smaller office spaces (under 50,000 square feet) showed moderate growth, with a slight 0.08% increase year-on-year, totalling 11.7 million square feet. NCR, Pune, and Chennai were the most active markets for small office space transactions, leasing 2.22 million, 1.78 million, and 1.6 million square feet, respectively.

Key Drivers Behind the Growth

Shishir Baijal, Chairman and Managing Director of Knight Frank India, attributed the growing demand for large office spaces to expanding global corporations, particularly the establishment of Global Capability Centres (GCCs). “Global firms are increasing their footprint in India to solidify their long-term presence, driving demand for large office spaces,” Baijal said.

The report also highlighted the continued importance of flexible workspaces, especially for sectors like third-party IT services and startups. Flexible workspaces provide adaptability and cost-effectiveness, crucial for companies navigating the evolving work landscape.

Future Outlook

India’s commercial real estate sector is poised for continued growth, driven by corporate expansion and the rise of flexible workspace solutions. The increasing demand for large, mid-sized, and even small office spaces across major cities reflects the robust potential of the market as companies seek premium spaces to accommodate their evolving business needs.