Synopsis
India's office leasing market achieved a historic milestone in 2024, reaching 81.7 MSF, a 19% increase from 2023, marking the highest leasing in a calendar year. The IT/ITES sector was the largest contributor, and demand for co-working spaces surged significantly.Key Takeaways
- Office leasing hit 81.7 MSF in 2024.
- IT/ITES sector accounted for 42% of demand.
- Bengaluru, Hyderabad, and Mumbai led the market.
- Large transactions above 100,000 sq ft made up 41% of demand.
- Co-working demand increased by 25%.
New Delhi, March 25 (NationPress) India’s office leasing sector achieved an unprecedented milestone in 2024, reaching 81.7 million square feet (MSF), marking a 19 percent rise from 2023 and the highest leasing ever recorded in a single calendar year, according to a report released on Tuesday.
The IT/ITES sector dominated the landscape, representing 42 percent of total leasing demand, a significant increase from 28 percent in 2023, as detailed by the real estate data analysis firm CRE Matrix and CREDAI.
“The robust business sentiment and heightened interest in flexible workspace solutions fueled India’s office leasing surge,” the report noted.
Bengaluru, Hyderabad, and Mumbai emerged as the primary hubs, collectively contributing to 62 percent of the demand and achieving a 20 percent year-on-year growth.
Aside from Bengaluru and Hyderabad, each of the other four top cities experienced their highest-ever demand for office leasing last year.
The report highlighted that the office leasing sector witnessed substantial interest in large transactions, with deals exceeding 100,000 sq ft accounting for 41 percent of total demand, reflecting a 13 percent YoY increase, particularly in Bengaluru and Pune.
Nationwide, office rental rates reached Rs 106 per square foot, showcasing a 13 percent annual growth, driven mainly by a favorable demand-supply balance, with Hyderabad, Pune, and Mumbai playing pivotal roles in this increase.
In 2024, India surpassed the significant milestone of 900 MSF of Grade A office stock. Bengaluru and Hyderabad were the largest contributors, providing 55 percent of this supply compared to 51 percent in 2023.
The average demand-to-supply ratio of 1.5 times in 2024 led to a decline in vacancy rates across areas like Delhi-NCR, Mumbai Metropolitan Region (MMR), and Chennai, reducing the national vacancy rate to 15.7 percent last year, down from 17.7 percent in 2023.
The co-working and flexible workspace segment added 13 MSF to office leasing demand in 2024, up from an average of 10 MSF over the previous three years, marking a 30 percent increase, according to the report.
Demand from co-working operators surged by 25 percent, with Delhi NCR doubling its presence and Bengaluru increasing by 1.4 times, the report further noted.
