According to a real estate advisory firm Colliers report, the demand for Grade A office space in India’s top six cities surged by 31% year-on-year (Y-o-Y) in the third quarter of 2024 (Q3 2024). The cities—Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune—saw a combined leasing of 17.3 million square feet (msf) during the quarter, reflecting a solid commercial real estate sector recovery.

Year-to-date (YTD) figures for 2024 show that these six cities absorbed 46.7 msf of office space, marking a 23% increase compared to the same period in 2023. The continued rise in demand has been driven by large-sized deals, particularly in Bengaluru, Hyderabad, and Mumbai.

Tech and BFSI Sectors Drive Demand

Bengaluru led the charge in office space absorption, with 81% of its total leasing in Q3 2024 coming from large-sized deals exceeding 1 lakh sq ft. Pune followed closely, with 71% of its leasing driven by large deals, primarily from the technology and banking, financial services, and insurance (BFSI) sectors.

“Office space demand in Bengaluru, Hyderabad, and Mumbai has reached close to or surpassed 2023 demand levels in the first three quarters of 2024,” said Arpit Mehrotra, Managing Director of Office Services at Colliers India. “Occupier confidence is reflected in the continued higher uptake of large-sized deals.”

The technology sector alone accounted for one-fourth of the overall office space demand in Q3 2024, followed closely by BFSI occupiers and flexible workspace operators. Interestingly, Bengaluru and Pune outperformed Mumbai in BFSI leasing, claiming 39% and 25% of the market share, respectively.

Increase in New Grade A Office Supply

The top six cities also substantially increased the supply of new office space. A total of 14.4 msf of Grade A office space was added in Q3 2024, representing a 33% Y-o-Y growth. This surge in supply indicates a healthy pipeline of new developments, with businesses showing confidence in India’s economic outlook and future growth prospects.

As the market evolves, flexible workspace operators contribute significantly to leasing activity. Flex spaces accounted for a notable portion of the total office space absorption, catering to the growing demand for adaptable, scalable office solutions.

Outlook for the Commercial Real Estate Market

India’s commercial real estate market is recovering strongly, with major cities like Bengaluru, Hyderabad, and Mumbai driving the demand for large office spaces. The steady increase in demand and supply of Grade A office spaces suggests that the sector will experience sustained growth in the coming quarters.

With the technology and BFSI sectors continuing to lead the charge and flexible workspaces playing an increasing role, India’s office market’s outlook remains positive as businesses expand and adapt to evolving work environments.