Indian office leasing Q1’24 surges by 35 per cent yoy to 13.6 million sq feet

Gurgaon: The first quarter of 2024 has begun with robust office leasing activity, amounting to a total of 13.6 million square feet across the top 6 cities, marking a significant 35% increase compared to the same period last year. This surge, while lower than the exceptional office space take-up in Q4 2023, reflects positive occupier sentiment, particularly notable for a typically slower first quarter. Bengaluru and Hyderabad emerged as key drivers of Grade A office space demand in Q1 2024, jointly representing more than half of India's leasing activity. Hyderabad's office market demonstrated notable momentum, experiencing a 2.2 times increase in space uptake compared to the corresponding quarter last year, led by the Healthcare & Pharma and Technology sectors. Additionally, Mumbai saw a substantial 90% year-on-year rise in leasing activity during Q1 2024.

"Hyderabad continues to establish itself as a significant commercial office market in the country. The city offers occupiers, including Global Capability Centers, favourable pricing advantages compared to other markets. Moreover, proactive government policies, ongoing infrastructure enhancements, and a conducive business environment make Hyderabad an appealing destination for investors, occupiers, and prominent commercial real estate developers in India. Within Hyderabad, the trio of Hi-Tec City, Gachibowli, and Madhapur remained the prime drivers of leasing activity in Q1 2024. Out of the 2.9 million square feet of Grade A space uptake in the first quarter, over 80% of the demand was concentrated in these three localities," stated Arpit Mehrotra, Managing Director, Office Services, India, Colliers.

During Q1 2024, the demand for office space was predominantly driven by the Technology, Engineering & Manufacturing, and BFSI sectors, collectively accounting for 58% of the total leasing activity across the top 6 cities. This strong start in 2024, marked by significant domestic occupier activity, sets a positive tone for India's office market. Engineering & manufacturing leasing saw an impressive surge, more than doubling to 2.8 million square feet in Q1 2024 compared to the same quarter last year. Bengaluru alone contributed approximately 55% of the sector's activity, indicating sustained preference among occupiers. The BFSI and Flex space sectors also witnessed healthy space uptake across most cities, capturing 14% and 13% of the overall India leasing in Q1 2024, respectively.