India’s commercial real estate market had a landmark year in 2024, achieving a record-breaking gross leasing volume (GLV) of 89 million square feet across eight major cities. According to a report by Cushman & Wakefield, this marked a 19% increase over 2023’s figures, surpassing the previous peak by 14 million sq ft. Net absorption, which measures actual demand for office space, also hit an all-time high of 50 million sq ft, solidifying India’s position as a global leader in office leasing.

Drivers of Growth in 2024

Several factors contributed to this unprecedented growth, including fresh leasing, open market renewals, and pre-leasing activities by corporate clients. The consistent performance over the last three years underscores India’s strategic importance in the global office space market. “2024 has been a defining year for India’s office sector, reaffirming the country’s position as a global hub for commercial spaces,” said Anshul Jain, Chief Executive, India, Southeast Asia, and APAC Tenant Representation, Cushman & Wakefield.

The fourth quarter of 2024 was particularly strong, with GLV reaching 24 million sq ft and net absorption at 16 million sq ft. Over 55% of the year’s leasing activity occurred in the second half, reflecting a sustained demand trajectory.

Bengaluru Leads the Way

Bengaluru emerged as the star performer, accounting for 29% of India’s total GLV with 25.93 million sq ft of space leased. The city also led in net absorption, recording 14.18 million sq ft, or 28% of the total absorption across India. This marked a historic high for Bengaluru, which continues to solidify its reputation as a global technology and innovation hub.

Mumbai followed with a 20% share of GLV at 17.84 million sq ft, while Delhi-NCR secured 15% with 13.14 million sq ft. Hyderabad and Pune rounded out the top five, leasing 12.31 million sq ft (14%) and 8.47 million sq ft (10%). These cities have seen growing interest from multinational corporations, unicorn startups, and global capability centres (GCCs).

Net Absorption Reflects Strong Demand

Net absorption—a critical measure of actual space utilised by occupiers—was another area of remarkable growth. The 50 million sq ft recorded in 2024 surpassed the pre-COVID peak of 2019 by 7 million sq ft and demonstrated the sustained resilience of India’s commercial real estate market.

Mumbai, Hyderabad, and Delhi-NCR followed Bengaluru in net absorption with 10.93 million sq ft, 8.18 million sq ft, and 7.06 million sq ft, respectively. This surge in absorption is driven by expansions in IT-BPM, engineering, and BFSI (banking, financial services, and insurance) sectors, as well as the increasing adoption of flexible workspace solutions.

Grade A Supply Faces Tight Market

While demand soared, the supply of Grade A office spaces struggled to keep up. In 2024 only 45 million sq ft of new Grade A completions were recorded, creating a tighter market with a vacancy rate drop of 16%, down nearly 2% from 2023. Core markets across major cities saw intensified competition for high-quality office spaces, driven by the increasing presence of multinational corporations.

This supply-demand imbalance will ease in 2025, with substantial new supply projected from suburban markets in key cities. The suburban shift aligns with changing preferences for larger, more affordable spaces that cater to hybrid work models and flexibility.

Sectoral Drivers of Demand

The IT-BPM sector was the largest contributor to demand in 2024, accounting for 30% of the gross leasing volume in Q4. Engineering and manufacturing followed with a 23% share, while BFSI accounted for 16%. Flexible workspaces also made a significant impact, contributing to 14% of the leasing activity.

Global Capability Centers (GCCs), which focus on innovation and operational excellence for multinational corporations, were a standout contributor, representing nearly 30% of the overall demand. GCCs have become an integral part of India’s commercial real estate ecosystem, reinforcing the country’s status as a critical player in the global economy.

“Primary growth drivers such as GCCs, flex spaces, domestic companies in BFSI, and manufacturing growth remain intact. We foresee 2025 carrying forward the positive momentum,” said Veera Babu, Managing Director of Tenant Representation at Cushman & Wakefield.

Flex Spaces Shape the Future

The flexible workspace sector has emerged as a key growth area, reflecting the shift toward agility and hybrid work models. In 2024, the sector captured 14% of the GLV, underscoring its growing importance in the workplace strategies of modern businesses. The increased adoption of flex spaces is attributed to their ability to offer scalability, cost-efficiency, and advanced technological solutions such as AI-driven space optimisation and smart building features.

India’s Global Leadership in Office Leasing

India’s dominance in office leasing extends beyond its borders. The country accounted for nearly 70% of total net absorption in the Asia-Pacific region 2024, outpacing major markets like the US and China. This leadership position highlights India’s ability to attract global corporations with its competitive costs, skilled workforce, and business-friendly environment.

“2024 has been exceptional, surpassing our bullish mid-year projections of demand crossing 80 million sq ft,” Jain noted. The sustained demand for Grade A spaces will strengthen India’s standing as a top commercial real estate investment destination.

Outlook for 2025

Looking ahead, the future of India’s office space market remains bright. With demand for Grade A spaces expected to remain robust, 2025 will likely see continued growth driven by strong fundamentals. The anticipated supply recovery in suburban areas and the ongoing expansion of GCCs and flex spaces will be pivotal in shaping the next growth phase.

As the Indian economy continues to evolve, the commercial real estate market stands poised to leverage these opportunities, further solidifying its position as a cornerstone of global office leasing. The record-breaking performance in 2024 is a testament to the sector’s resilience and adaptability, setting the stage for another promising year in 2025.