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India's office space market is rebounding in 2024, with gross leasing activity reaching 32.8 million sq. ft. in the first half across nine major cities, a 14% year-on-year increase. Technology companies, accounting for 28% of leased space, and Global Capability Centers (GCCs) driving 37% of the demand, are key contributors. The popularity of flexible workspaces is also rising, comprising 16% of leasing activity. With high-quality, sustainable office developments and expansions into Tier-II cities, the outlook remains positive for the rest of 2024, underscoring India's growing appeal as a global office hub.
India's office space is experiencing a strong comeback in 2024, with leasing activity exceeding expectations. This growth is driven by a surge in demand from specific sectors. Gross office leasing reached a healthy 32.8 million sq. ft. during the first half of 2024 (H1 2024) across nine major cities - Bangalore, Mumbai, Delhi-NCR, Hyderabad, Chennai, Pune, Kochi, Kolkata, and Ahmedabad. This is a significant 14% increase compared to the same period last year. Advertisement
Technology companies are the biggest tenants, taking up nearly a third (28%) of all leased space in H1 2024. This trend is particularly strong in Bangalore, India's established tech hub. Another key trend is the growing popularity of flexible workspaces. Companies are increasingly using a mix of traditional office space and co-working arrangements (16% share of leasing) to accommodate hybrid work models and optimize costs. This trend is expected to see flexible workspace stock grow significantly to 80 million sq. ft. by the end of 2024.
Global Capability Centers (GCCs), which are business units of multinational corporations, are also driving demand. India's skilled workforce, competitive costs, and established business environment are attracting a growing number of GCCs. They accounted for a substantial 37% of the total office leasing activity in H1 2024. This trend is expected to continue, with an anticipated 20% increase in GCCs by 2025, signaling further growth potential for the Indian office market.
The outlook for the rest of 2024 remains positive. Occupiers are seeking high-quality office space that prioritizes employee experience. This is leading to a trend of "flight-to-quality" relocations and upgrades (with a focus on sustainability) with developers constructing modern office spaces exceeding 13.2 million sq. ft. in Q2 2024 alone. These new developments boast amenities like green certifications (LEED or IGBC), improved air quality, and convenient access to public transportation.
While major cities like Bangalore, Delhi, Hyderabad, and Mumbai remain key office markets, smaller cities are also set for growth. Improved infrastructure, skilled talent availability, and competitive rental rates are making Tier-II cities like Ahmedabad, Coimbatore, Indore, and Nagpur attractive for strategic company expansions.
Overall, India's office market is undergoing a significant transformation, driven by a diversified tenant base (including tech, flexible space operators, GCCs, and BFSI firms) and a strong economy. With a focus on quality, sustainability, and flexibility, the future of Indian office space looks bright.
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