India Office Leasing Market Achieves Historic Growth in 2024
India’s commercial real estate market reached a historic milestone in 2024, with office leasing hitting a record 81.7 million square feet (MSF). This marks a 19% year-on-year growth, driven primarily by the IT and ITES sectors, which contributed 42% of the total leasing.
Key Factors Behind the India Office Leasing Boom
1. IT/ITES Sector Dominance
- The IT and ITES sectors spearheaded the demand, growing from 28% in 2023 to 42% in 2024.
- Increased hiring and business expansion in technology firms fueled leasing activity.
2. Top Performing Cities
- Bengaluru, Hyderabad, and Mumbai accounted for 62% of total office leasing.
- These cities recorded a 20% year-on-year increase in leasing volume.
3. Large-Sized Transactions on the Rise
- Transactions over 100,000 square feet comprised 41% of total leasing.
- Bengaluru and Pune emerged as key markets for large office spaces.
4. Declining Vacancy Rates
- The national vacancy rate dropped to 15.7% from 17.7% in 2023.
- Delhi NCR, Mumbai, and Chennai saw significant reductions in vacant spaces.
5. Surge in Co-Working Spaces
- Co-working leases grew by 30%, reaching 13 MSF in 2024.
- Delhi NCR and Bengaluru led this growth, catering to startups and hybrid work models.
6. Rising Office Rentals
- The average rental rate increased by 13%, now standing at ₹106 per sq ft.
- Hyderabad, Pune, and Mumbai saw the highest rental appreciation.
7. Grade A Office Space Expansion
- Despite a 19% drop in new office completions, India’s Grade A office stock surpassed 900 MSF.
- Bengaluru and Hyderabad contributed 55% of new supply.
Pros and Cons of the Office Leasing Surge
Pros:
✅ Strong IT/ITES industry growth, reinforcing India’s position as a tech hub.
✅ Expansion in co-working spaces, offering flexible work solutions.
✅ Lower vacancy rates, signaling a healthy demand-supply balance.
Cons:
❌ Supply constraints with a 19% drop in new office space completions.
❌ Over-reliance on IT/ITES, making the market vulnerable to sectoral downturns.
Takeaway: A Positive Outlook with Future Challenges
The Indian office leasing market in 2024 set a new benchmark, demonstrating the resilience of commercial real estate. IT/ITES firms, rising co-working trends, and urban office expansion remain key drivers of growth. However, addressing supply shortages and diversifying tenant demand will be crucial for sustained momentum.
For expert guidance on commercial real estate investments, visit Setu Realtors.
Input: Moneycontrol
