Office net absorption grows 18% to nearly 50 million sq ft in 2024; vacancy drops slightly amid tech recovery

Net absorption in offices reached a new high of nearly 50 million sq ft for 2024 in India

India's office market reported a record net leasing absorption of 49.56 million square feet (msf) in 2024, growing nearly 18% over 2023 as demand from technology companies recovered from a post-pandemic slump, driven by the setting up of global capability centres (GCCs) across markets.

Managed and flexible space operators were also among the leaders in office leasing last year.

According to figures shared by real estate consultants JLL India, Bengaluru remained India's largest office market at nearly 15 msf, with net absorption growing by more than 60 percent year on year. The Karnataka capital was followed by Delhi NCR and Mumbai in terms of net absorption, with only Chennai and Kolkata reporting a drop in net absorption for 2024.

Gross leasing across the top seven cities, which includes new deals as well as pre-commitments, was at 77.22 msf, also a new high. Vacancies, while declining by 60 basis points on a sequential basis at the end of December 2024, remained on the higher side at 16.3 percent, even as it represents a three-year low. JLL added that barring Pune, vacancies declined across all major markets.

Some observers have expressed concerns about vacancies in cities such as Hyderabad being on the higher end, at more than 20 percent, according to recent reports. Experts added that with unlimited floor space index and some landmark companies such as Google setting up large offices in the city, some developers "overbuilt" Grade-A office spaces, resulting in stagnant rentals and increased vacancies.

GCC push

Global companies, after a two-year period of conserving cash amid economic issues in North America and Europe, have returned to the Indian market for new investments and strategic operations, including the setting up of GCCs, according to observers.

"Global companies played a crucial role, driving 58.6 percent of leasing activity, as India remains central to their real estate expansion plans. GCCs had a standout year, capturing 35.9 percent of the market with approximately 28 msf leased. As India's position as the office to the world strengthens, its focus on AI and emerging technologies, alongside engineering R&D capabilities, is expected to further propel demand, making it a key destination for headcount growth and innovation over the next decade," said Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.

Industry insiders also highlighted the role of managed and flexible space operators, leasing around 15 msf of office space. They added that with a number of flex space operators being listed or headed in that direction, the industry is boosting its portfolio across most cities, especially Bengaluru, Delhi NCR, and Pune.