India’s top six cities experienced a significant surge in Grade A office leasing during the first three quarters of 2024, recording a 23% increase in demand, according to a Colliers report. The total office space leased reached 46.7 million sq ft, with Bengaluru and Hyderabad leading the charge, accounting for more than half of the overall leasing activity. Bengaluru set a new record with its highest-ever quarterly leasing at 6.3 million sq ft. At the same time, Pune also saw impressive growth, with leasing activity surging 2.6 times compared to the same period in 2023.

The supply side also witnessed robust growth, with 14.4 million sq ft of new office completions in Q3 2024, marking a 33% year-on-year (YoY) increase. Bengaluru and Hyderabad contributed significantly to the new supply, accounting for 64%. Delhi-NCR saw its highest quarterly addition in eight quarters, with 3.3 million sq ft of new space, led by the South Delhi micro-market, which contributed 70% of the city’s supply growth.

This surge in leasing activity was driven by large deals of over 1 lakh sq ft, making up 65% of the total activity in Q3 2024. Bengaluru led the way, with 81% of its leases being large deals, followed by Pune at 71%, primarily driven by the Technology and BFSI (Banking, Financial Services, and Insurance) sectors. The technology sector alone contributed to 25% of the overall office demand in Q3, with BFSI occupiers and flexible space operators also playing a significant role.

Interestingly, Bengaluru and Pune outpaced Mumbai in BFSI leasing, contributing 39% and 25% of the total BFSI demand, respectively. Flex space operators saw substantial activity, with 3.4 million sq ft leased, making up 20% of the total demand. Prominent micro-markets such as SBD 1 in Bengaluru, Golf Course Road in Delhi NCR, CBD in Pune, and SBD in Hyderabad became key hubs for flexible office space leasing.

Despite the high demand, vacancy rates across major markets remained stable, with the overall vacancy rate in India standing at around 17% by the end of Q3 2024. Despite strong leasing activity, this stability reflects a well-balanced office space market.

In conclusion, the office space market in India’s top cities witnessed remarkable growth in 2024, driven by strong demand from the technology and BFSI sectors. With new supply additions keeping pace with demand, the market is set to continue its upward momentum, making it an exciting time for the Grade A office space sector.