Office space demand across six major Indian cities is expected to see a significant rise, with gross leasing projected to increase by 35% annually in the January-March quarter of 2024, according to real estate consultant Colliers India. The total gross leasing of office space is estimated to reach 13.6 million square feet, up from 10.1 million square feet in the same period last year.

Significant Growth in Hyderabad and Mumbai

Hyderabad is set to lead this growth, with office space leasing expected to more than double to 2.9 million square feet from 1.3 million square feet in the year-ago period. “Hyderabad continues to strengthen its role as a prominent commercial office market in the country,” said Arpit Mehrotra, Managing Director-Office Services at Colliers India. He noted that the city’s competitive pricing, supportive government policies, continuous infrastructure upgrades, and favorable business ecosystem make it an attractive destination for investors and occupiers.

Mumbai is also expected to see a significant surge in demand, with leasing projected to rise by 90% to 1.9 million square feet from 1 million square feet. This robust growth underscores the city’s ongoing appeal as a major commercial hub in India.

Steady Growth in Bengaluru and Delhi-NCR

Bengaluru, a major tech hub, is set to experience a 25% increase in office space leasing, reaching 4 million square feet compared to 3.2 million square feet last year. Meanwhile, Delhi-NCR is projected to see a 14% rise in demand, with leasing expected to hit 2.5 million square feet, up from 2.2 million square feet.

Mixed Trends in Chennai and Pune

The demand for office space in Chennai is expected to decline slightly by 6% to 1.5 million square feet, compared to 1.6 million square feet last year. Demand in Pune will likely remain flat at 0.8 million square feet.

Sector-Wise Leasing Activity

According to Vimal Nadar, senior director and research head at Colliers India, occupiers from the technology, engineering, manufacturing, and BFSI (Banking, Financial Services, and Insurance) sectors collectively accounted for 58% of total leasing activity across the top six cities during the first quarter.

Growing Demand for Flexible Workspaces

The demand for flexible workspaces, including managed office spaces, is also rising. “The office demand continues to be strong across major cities from domestic and global companies, driven by high economic growth, cost-effective real estate, and availability of skilled talent,” said Amal Mishra, co-founder and CEO of Urban Vault. This trend highlights the increasing preference for adaptable work environments catering to diverse business needs.

Data Release Timing

Colliers India released the data before the quarter’s end, considering only closed transactions while accounting for gross absorption (leasing) numbers. “Larger and major deals expected to close have been factored in, as only three working days of the quarter are left in the coming week,” the company explained.

Conclusion

The Indian office space market is experiencing robust growth, driven by strong economic fundamentals and a dynamic business environment. As cities like Hyderabad, Mumbai, and Bengaluru continue to attract significant investments, the demand for traditional and flexible office spaces is set to rise, making India a pivotal hub for global business operations.