New Office Supply Hit All-Time High In 2024 Across 7 Major Cities

With robust absorption and supply in 2024, vacancy rates improved slightly, decreasing from 13.98 per cent in 2023 to 13.91 per cent in 2024. Additionally, rental prices increased by 3.8 per cent to 8.2 per cent across the top seven cities

Mumbai: The year 2024 has been challenging for the Indian office market due to global macroeconomic uncertainty, escalating geopolitical frictions, and sticky inflation, says a report by Vestian.

Despite these challenges, India’s office market reported the highest-ever supply in any year, it added.

Talking to Bizz Buzz, Shrinivas Rao, FRICS, CEO, Vestian says, “2024 has proven to be a standout year for the commercial space industry, with robust growth in both demand and supply. As a result, the top seven cities reported the highest-ever new completions and absorption in any calendar year. New completions increased by 7 per cent over the previous year, reaching 51.5 Mn sq ft in 2024.”

Similarly, absorption also rose by 16 per cent to 70.7 Mn sq ft in 2024. Despite global challenges, these figures indicate a strong market resilience. Looking ahead to 2025, the sector is poised for continued growth driven by increasing demand for GCCs and a strong pipeline of under construction office buildings.

A surge in demand for grade-A office spaces kept developers active throughout the year. Construction activities increased by 7 per cent compared to the previous year, reaching 515 lakh square feet, marking the highest supply ever recorded. Among the top seven cities, the maximum fresh supply was seen in Hyderabad followed by Bengaluru.

With robust absorption and supply in 2024, vacancy rates improved slightly, decreasing from 13.98 per cent in 2023 to 13.91 per cent in 2024. Additionally, rental prices increased by 3.8 per cent to 8.2 per cent across the top seven cities.

Since the pandemic, office space absorption has gradually increased each year, despite global headwinds. In 2024, the absorption reached an all-time high of 707 lakh square feet, reflecting a 16 per cent annual increase. All cities except the National Capital Region (NCR) and Kolkata reported their highest-ever absorption levels during 2024. Absorption in Kolkata and NCR saw annual declines of 36 per cent and 14 per cent, respectively.

Shrinivas Rao, FRICS, CEO, Vestian said, “Emphasis on sustainability has grown among occupiers as several multinational companies with offices in India have pledged to achieve net-zero emissions, leading to a rise in demand for green-certified office spaces in India.”

Anticipating this shift, leading developers are prioritizing the construction of sustainable office buildings.