Despite global economic challenges, office space demand growing in India

Bengaluru and Hyderabad emerged as frontrunners for demand of Grade A office space in Q1 2024, cumulatively accounting for more than half of the India leasing activity. Amongst other major office markets, Mumbai too experienced a notable surge in the leasing activity

Mumbai: Despite economic challenges faced by global economies, the office market has received significant support from domestic companies as well as the international ones increasing their presence across locations. In fact, there is a growing demand for office space in the country for past few years.

Talking to Bizz Buzz, Gagan Randev, Executive Director, India Sotheby's International Realty says, “Over the past few years, there has been a consistent rise in the demand for office space. The level of demand may vary depending on the location, but sectors such as BFSI, startups, and IT-ITES have been key drivers for this demand. Coworking players have also significantly contributed in the last few years post Covid.”

The first quarter of 2024 has started on a strong note, registering total leasing of 13.6 million square feet across the top 6 cities, marking a remarkable 35 per cent increase compared to the same period last year. Although this is a significant drop from the record office space take-up in the last quarter of 2023, the remarkable annual increase is indicative of upbeat occupier sentiment, given the fact that the first quarter is typically slower, says a study.

Amal Mishra, Co-founder, UrbanVault, a Bengaluru-based managed co-working space provider, says: “The demand for office space has been steadily increasing over the past couple of years. While the IT and BFSI sectors have been the primary drivers of this demand, other sectors are also contributing to significant growth in demand. We attribute this rise in demand to several factors, including a favourable economic environment, stable governance, improvements in the ease of doing business, and the availability of Grade A office spaces.”

Also, there is a notable trend of global companies establishing their Global Capability Centers (GCC) in India, while domestic corporates are also upgrading to Grade A offices. Co-working companies are emerging as major occupiers of Grade A office spaces, with many opting for managed co-working setups over traditional office spaces. This shift is driven by the numerous advantages that managed co-working spaces offer, such as flexibility, cost-effectiveness, and access to modern amenities and networking opportunities, he said. Bengaluru and Hyderabad emerged as frontrunners for demand of Grade A office space in Q1 2024, cumulatively accounting for more than half of the India leasing activity. Amongst other major office markets, Mumbai too experienced a notable surge in the leasing activity, an impressive 90 per cent a YoY rise in Q1.