Office space leasing across eight main micro-markets is set to reach a record 85 million square feet (msf) in calendar year 2024, registering 13 per cent year-on-year (YoY) growth over leasing in 2023.
According to Cushman & Wakefield, a real estate consultant, in 2023, the gross leasing of office space stood at 74.6 msf across eight cities, which included Delhi-NCR (National Capital Region), Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata, Pune and Ahmedabad. The upcoming calendar year of 2025 is projected to sustain demand amidst surge in pre-committments.
There could be some tapering off from these levels seen in 2025, the gross leasing volume (GLV) would continue to remain much above the 70 msf as on date, which is now a new-normal level of office market activity.
“The year 2024 is likely to end with a historic high GLV of office spaces at 83-85 msf, thereby beating the previous peak volume of 2023 by 13 per cent YoY. Growth was driven by healthy volumes seen in the IT-BPM [information technology and business process management], BFSI {banking, financial services, and insurance], engineering and manufacturing [E&M] and flex operator spaces, as these were the top performing sectors,” the consultant said in its round-up for the calendar year 2024.
In the GLV break-up, contribution of fresh leasing has remained strong with over 70 per cent share, while pre-committments have started to surge as occupiers want to book quality spaces in advance.
Data showed that during January-September 2024, the GLV has reached 66.7 msf. Office leasing stood at 72 msf in 2022 and 50.4 msf in 2021. In 2020, when the Covid-19 pandemic struck, 46.6 msf office space was leased. In 2018 and 2019, the corresponding figures were 49.1 msf and 67.7 msg, respectively.
New supply is coming in slower-than-expected, as only 48 msf is expected by the end of 2024, thereby reducing the vacancy rate sharply. In 2025, supply is slated to increase though. However, the core markets across the cities will have low vacancy rate in 2025.
The unprecedented surge in demand coupled with a relatively slower supply could lead to vacancy rates falling sharply to 17 per cent as of end-2024.
GCCs take up lion’s share
India’s rising attractiveness as a destination for Global Capability Centres (GCCs) has had a big influence on demand in commercial leasing. At present, GCCs account for around 30 per cent of GLV, with the share slated to rise further.
Experts said that India remains the most preferred destination for GCCs by multinational companies (MNCs) from the West and the advanced Asia Pacific region. The ongoing expansion of established GCCs highlights the confidence that global companies have in India’s workforce and operating environment, emphasising their long-term committment to the Indian market.
While the overall GLV of office space for 2025 is expected to remain lower than 2024, GCCs are expected to deliver higher volume in the next year (as compared to 2024) with an expected share of 35 per cent in GLV of top-eight cities.
Veera Babu, Managing Director (MD), tenant representation, Cushman & Wakefield, said that 2024 is shaping up to be a record-breaking year for India’s office sector, with gross leasing volumes expected to reach 85 msf — the highest ever recorded in Indian commercial real estate.
“This momentum is largely driven by fresh leasing, accounting for over 70 per cent of activity, and the growing presence of GCCs, which contributed nearly 30 per cent of total leasing and are projected to rise to 35 per cent in 2025. As we move into 2025, occupiers should anticipate limited Grade-A space in core markets, prompting the need for pre-leasing strategies to secure premium locations,” he said.
Babu said that rental growth in prime markets may shift some demand to emerging micro-markets, where supply and talent pools align.
“The focus will increasingly be on employee experience, amenities, and proximity to talent hubs, shaping the next phase of office development in India. With this strong demand trajectory, the future of India’s office market looks brighter than ever," he added.
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