In 2024, the gross lease volume of office space in India will reach 89 million square feet

By Bricksnwall | 2025-01-03

India's commercial real estate update: According to the research, the IT-BPM industry contributed the most to demand in Q4 2024, accounting for roughly 30% of the total.

In 2024, the gross lease volume (GLV) of office space in India's top 8 cities reached a record-breaking 89 million square feet. According to a survey by real estate firm Cushman & Wakefield, net absorption hit a record-breaking 50 million square feet.

The report states that the leasing record in 2024 represents the greatest gross leasing GLV ever recorded in the industry, surpassing the top in 2023 by a noteworthy 19% and 14 million square feet.

Pre-lease, corporate open market renewals, and new take-up were some of the reasons for the rise in gross leasing volume. According to the research, this performance demonstrates three years of steady expansion in the office market activities, solidifying India's standing as the global office.

Hyderabad, Mumbai, and Bengaluru have the highest rental rates

According to the research, 2024 saw the biggest leasing volumes ever recorded in Hyderabad, Mumbai, and Bengaluru. At 25.93 million square feet, Bengaluru accounted for 29% of India's GLV, followed by Mumbai at 20% with 17.84 million square feet and Delhi-NCR at 15% with 13.14 million square feet.

With respective shares of 14% (12.31 million sq ft) and 10% (8.47 million sq ft), Hyderabad and Pune completed the top five cities.

Office space net absorption

Net absorption, a measure of actual market demand or growth in occupied space, also reached a record-breaking 50 million square feet, significantly exceeding the 2019 pre-COVID peak by seven million square feet. With 14.18 million square feet, or 28% of the overall net absorption, Bengaluru once again topped the list in terms of absorption, setting a new record for the city.

The Grade A office supply was unable to keep up

According to the report, the supply of Grade A office buildings was unable to keep up with the high demand. There were 45 million square feet of new Grade-A completions in 2024.

As a result, the 2024 vacancy rate is 16%, which is 1.8%–2% lower than the previous year. Due to heightened demand from international corporations, core marketplaces in all major cities have become even more constrained. According to the analysis, supply is anticipated to rebound in 2025, with a sizable amount of that recovery occurring in the suburban markets of major cities.

The robust demand was mostly caused by the fourth quarter of 2024, when net absorption and GLV were 16 million square feet and 24 million square feet, respectively. According to the research, between 55 and 58 percent of the total GLV and net absorption occurred in the second half of the year.

2024 has been outstanding, even exceeding our optimistic mid-year forecasts that demand would reach 80 million square feet. "We anticipate 2025 maintaining the positive momentum, with key growth drivers like GCCs, flex, domestic companies, particularly in banking and financial services, and manufacturing growth remaining intact," stated Veera Babu, Managing Director, Tenant Representation, Cushman & Wakefield.

Source: Hindustan Times