Bengaluru, Hyderabad, and Mumbai Lead India’s Office Leasing Surge in 2024

India's office leasing market has broken all previous records in 2024, with 66.4 million square feet of office space leased across the country's top six cities. This marks a 14 per cent increase year-over-year (YoY) and solidifies the momentum from the previous two years.

Bengaluru led the charge, with leasing demand surpassing 21.7 million square feet, reflecting a 40 per cent increase from 2023. Hyderabad and Mumbai also saw significant growth, with leasing volumes crossing 10 million square feet in each city for the first time.

The leasing trend in 2024 showcased a broad-based demand surge, with Bengaluru, Hyderabad, and Mumbai emerging as the primary hubs of activity.

Bengaluru's performance was particularly noteworthy, accounting for approximately one-third of India's total office leasing. The city recorded 21.7 million square feet in leasing activity, marking a 39 per cent increase over the previous year. Hyderabad, with 12.5 million square feet, and Mumbai, at 10.0 million square feet, both saw substantial gains.

Delhi-NCR also maintained healthy demand, with Grade A office space leasing nearly reaching the 10 million square feet mark.

The final quarter of 2024 delivered the highest quarterly leasing volume of the year, with 19.7 million square feet leased across major cities, a 14 pr cent increase from Q3 2024. Bengaluru continued to dominate, contributing 6.6 million square feet, while Hyderabad and Mumbai saw significant quarterly growth, with respective increases of 41 per cent and 71 per cent over the previous quarter.

Flex Space Leasing Hits New Highs

Flex space leasing experienced exceptional growth in 2024, with total annual leasing reaching 12.5 million square feet, up 45 per cent YoY. The sector accounted for nearly 20 per cent of all Grade A office space leasing, up from 5-15 per cent in previous years. Q4 2024 alone saw a record 4.7 million square feet of flex space leased, marking the highest quarterly absorption for the sector.

Technology companies continued to lead the way in overall office space leasing, contributing nearly 25 per cent of the total demand. However, flex space was the standout performer, with strong uptake from sectors such as technology, BFSI (Banking, Financial Services, and Insurance), and engineering & manufacturing. Large leasing deals, particularly those exceeding 100,000 square feet, played a key role in driving this demand.

On the supply side, new completions in 2024 totaled 53.3 million square feet, a 6 per cent increase compared to 2023. Bengaluru and Hyderabad were the main contributors, together accounting for over half of the new office supply. Despite the rise in supply, demand continued to outpace new additions in most cities, pushing national vacancy levels down by 80 basis points year-over-year.

Rental prices across major cities saw a 5 per cent increase in 2024, indicating strong market confidence and a tightening supply-demand balance. Vacancy levels remained stable, and the leasing market continues to demonstrate its strength and resilience.

The technology sector was the largest contributor to office leasing, with 16.3 million square feet of space leased in 2024, reflecting a 14 per cent increase over the previous year. The BFSI sector, despite facing a decline in Q4, maintained consistent leasing activity, while engineering and manufacturing firms also continued to expand their office footprints.

Flex spaces experienced the most dramatic growth, with leasing up 44 per cent year-over-year. Other sectors, such as healthcare, pharma, and e-commerce, also saw substantial increases in leasing activity.

Outlook for 2025 and Beyond

The Indian office leasing market is all set for continued strength in 2025, with demand expected to stabilize at high levels. Cities like Bengaluru and Hyderabad are likely to remain key drivers of growth.