Unprecedented Growth in Leasing Activity Drives Market Confidence

Bengaluru, 26th September 2024: The demand for Grade A office space across India’s top six cities has surged to an impressive 46.7 million sq ft in the first nine months of 2024, marking a remarkable 23% year-over-year growth. The third quarter alone saw leasing activity soar to 17.3 million sq ft, a significant 31% increase compared to Q3 2023.

Bengaluru and Hyderabad Lead the Charge

Bengaluru and Hyderabad have emerged as the frontrunners, accounting for over half of the total leasing in Q3 2024. Bengaluru, in particular, recorded its highest quarterly leasing ever at 6.3 million sq ft, showcasing its dominance in the office market. Pune also experienced a substantial increase, with 2.6 million sq ft leased, representing a remarkable 2.6 times growth from Q3 2023.

New Supply Reflects Strong Market Confidence

In tandem with rising demand, new office supply surged 33% year-over-year in Q3 2024, reaching 14.4 million sq ft. Bengaluru and Hyderabad contributed to 64% of this new supply, while Delhi-NCR reported its highest quarterly supply in two years, with 3.3 million sq ft coming online, primarily driven by significant completions in South Delhi.

Sector Trends: Technology and BFSI Dominate

The technology and BFSI sectors continued to lead the demand for office space, with flex space leasing achieving new heights. Flex space transactions reached 3.4 million sq ft in Q3 2024, capturing nearly 20% of the total leasing activity. Notably, Bengaluru and Pune outperformed Mumbai in BFSI leasing, securing 39% and 25% of the sector’s share, respectively.

Large Deals Fuel Growth in Leasing Activity

The trend towards larger office spaces is evident, with deals exceeding 100,000 sq ft making up 65% of total leasing in Q3 2024. Bengaluru led the way with 81% of its leasing driven by large transactions, followed by Pune at 71%. This indicates robust occupier confidence and a shift towards larger, flexible office solutions.

Vacancy Rates Hold Steady Amid Rising Demand

Despite the increase in leasing and new supply, vacancy rates across major markets remained stable, hovering around 17% at the end of Q3 2024. This balance between demand and supply reflects the growing appetite for quality office space in India.

Key Transactions Showcase Market Activity

Highlighted deals in Q3 2024 included significant leases such as BNY Mellon in Pune (916,200 sq ft) and Salesforce in Bengaluru (640,000 sq ft), underscoring the strong interest in premium office locations.

As the office market continues to evolve, the impressive demand trends signal a resilient recovery and ongoing confidence among occupiers and developers alike. The outlook for the remainder of 2024 remains optimistic, with expectations of sustained growth in leasing activity across key urban centers.