India’s office leasing market reached a historic milestone in 2024, with total leasing activity soaring to 81.7 million square feet (msf), marking a 19% increase from the previous year, setting a new benchmark in the commercial real estate sector. According to a report by CRE Matrix in collaboration with the Confederation of Real Estate Developers’ Associations of India (CREDAI), the surge was fueled by a robust business environment and the rising preference for flexible workspaces.

Despite economic uncertainties, demand for office space remained strong, particularly in Bengaluru, Hyderabad, and Mumbai, which collectively accounted for 62% of total leasing activity. These cities experienced a 20% year-over-year growth, while all major metropolitan areas, excluding Bengaluru and Hyderabad, recorded their highest-ever leasing volumes. This trend underscores the nationwide expansion of India’s office sector.

Interestingly, new office completions in India declined by 19% to 53 msf in 2024. However, the total Grade A office stock surpassed 900 msf, with Bengaluru and Hyderabad contributing 55% of the new supply. “The demand-to-supply ratio stood at 1.5x, leading to a significant drop in vacancy rates across key markets like Delhi NCR, Mumbai Metropolitan Region (MMR), and Chennai,” the report highlighted. The overall vacancy rate in India decreased from 17.7% in 2023 to 15.7% in 2024, signalling a strong absorption of available office spaces.

The co-working and flexible office space sector witnessed remarkable growth, with leasing demand rising by 30% to 13 msf in 2024. “Demand from co-working operators increased by 25% year-over-year, with Delhi NCR seeing demand double and Bengaluru experiencing a 1.4 times increase compared to last year,” the report noted. This trend reflects the shift towards hybrid work models and the need for agile office solutions.

The IT and IT-enabled Services (ITES) sector emerged as the primary driver of office leasing, accounting for 42% of total demand in 2024, up from 28% in 2023. The dominance of this sector underscores its continued expansion and critical role in India’s commercial real estate landscape. Additionally, transactions exceeding 100,000 square feet comprised 41% of total leasing, a 13% year-on-year rise, with Bengaluru and Pune standing out as key markets for large-scale corporate expansions.

Rising demand has also pushed rental prices upward, with the Pan-India average reaching ₹106 per square foot—an increase of 13% from 2023. Cities like Hyderabad, Pune, and Mumbai saw the most significant hikes, driven by strong demand and constrained supply.

As India’s office leasing market expands, the growing adoption of flexible workspaces and the sustained momentum in IT and large-scale corporate transactions signal a dynamic future for the sector.