India's office leasing soars 14% to record 66.4 mn sq ft in 2024; here's why

Amid a boom across the entire real estate sector, the office market in 2024 saw leasing activity across the top six cities reach 66.4 million square feet, a 14% growth year-on-year, marking the third consecutive year of demand milestone. Bengaluru drove Grade A office space demand, with the highest-ever leasing volume of 21.7 million square feet, a 40% YoY increase, according to the latest data shared by real estate services and investment management major Colliers.

Hyderabad and Mumbai also saw demand scale-up, with 12.5 and 10.0 million sq feet of leasing activity respectively. Both witnessed double-digit annual office space demand for the first time. Delhi-NCR also saw healthy space uptake and Grade A demand almost touched 10 million sq feet in 2024.

Record-breaking leasing activity

The year 2024 saw leasing activity in each quarter surpassing the previous quarter. At 19.7 million sq feet, Q4 2024 saw the highest leasing during 2024, a 14% increase over the previous quarter. Hyderabad and Bengaluru led leasing activity during Q4 2024, contributing to 54% of India's leasing during the quarter. Among the top six cities, while quarterly leasing was highest in Bengaluru at 6.6 mn sq feet, QoQ demand growth was highest in Mumbai & Hyderabad at 71% and 41% respectively.

“After witnessing higher space uptake in successive quarters, Grade A office space demand in India has broken all past records and registered 66.4 million sq feet of activity in 2024. Three out of the six major cities witnessed more than 10 million sq feet of annual leasing. Bengaluru especially witnessed remarkably strong demand of close to 22 million sq feet and accounted for one-third of the total space uptake in 2024," says Arpit Mehrotra, MD, office services, Colliers India.

He adds that new supply during the year also remained above the 50 million sq feet mark and kept vacancy levels rangebound. "2025 demand can potentially stabilise at elevated levels and annual space uptake exceeding 60 million sq feet is likely to be the new norm over the next few years,” says Mehrotra.

Notably, factors like economic recovery and expansion after the pandemic, coupled with tech and BFSI sector growth, rise in flex space demand and large deals, helped sustain growth momentum in 2024. Analysts say the momentum is expected to continue in 2025 as well.

Flex space leasing touches new high

At 4.7 million sq feet, flex spaces saw their highest-ever quarterly leasing, says Colliers data. Interestingly, of all the demand sectors, flex space demand was the highest and accounted for 24% of the Grade A space uptake in Q4 2024.

Strong flex activity propelled the flex space demand to a record annual absorption of 12.5 million sq feet, a 45% YoY growth. While the technology sector continued to drive annual office space demand with almost one-fourth share in overall leasing, flex spaces accounted for almost one-fifth of the Grade A space uptake in 2024.

BFSI and engineering & manufacturing sectors too crossed the 10 million sq feet leasing in 2024. Notably, large-sized deals (≥100,000 sq feet) leasing activity contributed to 54% of total demand in 2024.

“Annual flex space leasing has comfortably surpassed 10 mn sq feet mark for the first time, eventually registering Grade A space uptake of 12.5 million sq feet in 2024, a 45% year-on-year increase. Delhi-NCR, followed by Bengaluru, together accounted for over half of the total flex space leasing during the year. Flex operators accounted for almost 20% of the India office space demand in 2024, up from 5-15% share in each of the years starting 2020,” says Vimal Nadar, senior director and head of research, Colliers India.

Vacancy levels rangebound

On the supply side, Q4 2024 witnessed 15.9 million sq feet of new completions, pushing the total to 53.3 million sq feet for the year, a 6% growth compared to 2023. Bengaluru and Hyderabad were the major contributors and cumulatively accounted for 54% of the new supply during 2024. With demand exceeding new supply across most cities, overall India vacancy levels declined by 80 basis points on an annual basis. Rentals, meanwhile, increased by 5%, compared to 2023.