India, 2024: The office space market in India is set to break records in 2024, with absorption projected to exceed 70 mn sq. ft., according to the latest report from Savills India, a global real estate advisory firm. The demand reached 55.1 mn sq. ft. between January and September 2024, marking a 30% year-on-year (YoY) increase across six major cities.

The Year-To-Date (YTD) leasing activity has set a new benchmark for the January-September period, aligning with 2022’s full-year performance. With only 7 mn sq. ft. remaining to surpass 2023’s total, 2024 is expected to achieve absorption levels in the range of 70-74 mn sq. ft.

Q3 2024 Surge
The third quarter of 2024 saw office absorption hit 20.2 mn sq. ft., a 28% increase from Q3 2023. Bengaluru, Delhi-NCR, and Mumbai collectively contributed 66% of the overall leasing activity during this period.

The IT-BPM sector led the market with a 29% share in Q3, followed by Flexible Workspaces (23%) and the BFSI sector (22%). Additionally, large deals accounted for 50% of total leasing activity, with Bengaluru, Delhi-NCR, and Pune driving more than 50% of their respective leasing through such transactions. While demand soared, new office completions slowed down during the first nine months of 2024, with a total of 32.6 mn sq. ft. added, reflecting a 12% YoY decline. As a result, vacancy rates decreased to 15.5% by the end of September.

2024 Projections
Savills India forecasts that leasing activity will reach 70-74 mn sq. ft. by the end of 2024, representing a 17% increase from last year. New completions are also expected to accelerate, with a projected total of 60-62 mn sq. ft., a 22% increase from 2023.

“India’s office market reached record-high absorption levels in Q3 of 2024, reflecting strong business sentiment amongst occupiers. With employees returning to physical offices, demand has surged across all segments, including tech. We anticipate this momentum to continue in the last quarter of the year, potentially driving absorption levels to new record of over 70 mn sq.ft in 2024. Demand is likely to be driven by tech, BFSI, flex workspace and engineering & manufacturing occupiers.” said Naveen Nandwani, MD, Commercial Advisory and Transactions, Savills India.” said Naveen Nandwani, MD, Commercial Advisory and Transactions, Savills India.

Bengaluru
● Bengaluru recorded 6.2 mn sq. ft. of absorption in Q3 2024, registering a 48% increase YOY. Large-sized deals (100,000 sq. ft. and more) continued to dominate the leasing activity, accounting for 67% of the total share.
● YTD 2024, absorption stood at 15.9 mn sq. ft., registering a significant rise of 49% in the corresponding period the previous year. The city is expected to achieve a record gross absorption of about 20 mn sq. ft., in 2024.
● Q3 2024 recorded a significant influx of new supply of 6.2 mn sq. ft., representing a 128% increase compared to the previous quarter.
● The BFSI sector saw a significant rise in demand, contributing 23% to the city’s total market leasing activity in Q3 2024, while the IT-BPM sector continued to be the top contributor with a 46% share.

Chennai
● The city recorded absorption of 1.8 mn sq. ft.in Q3 2024, registering a YOY decline of 35%. Large size deals of 100,000 mn sq. ft. and above continued to dominate the leasing activity, with a 42% share.
● Leasing activity in Q3 was predominantly centered in the OMR Zone 1 (Tharamani, Perungudi, MGR Salai) and MPR micro markets (Mt Poonamalle Road – Manapakkam, Porur, Nandambakkam, Ramapuram), which collectively accounted for 64% of the total market share. CBD, Guindy and OMR Zone 2(Thoraipakkam, Shollinganallur, Navalur, Siruseri) micromarkets also remained prominent, contributing 10%, 6%, and 9% of the office space demand, respectively.
● The flexible workplace segment registered a significant Q-O-Q growth, with its market share rising from 6% to 29%. The IT-BPM and BFSI sectors continued to be key drivers of leasing activity in Q3, accounting for approximately 24% and 18% to the overall market share, respectively.
● Owing to the increasing demand for office space and limited available supply, Q-O-Q rentals in the MPR and Guindy micromarkets have shown an uptick of 7% – 9%.

Delhi-NCR
● Delhi-NCR recorded absorption of 4.0 mn sq. ft. in Q3 2024, registering a 92% YOY increase. YTD absorption stood at 7.6 mn sq. ft., registering a decline of 6% when compared with the absorption in corresponding period in 2023. The region is expected to witness gross absorption of 11-12 mn sq. ft. in 2024.
● In Q3 2024, the region added 0.7 mn sq. ft. of new supply, bringing the YTD supply to 2.0 mn sq. ft. This marks a 17% decrease compared to the 2.4 mn sq. ft. of supply recorded during the same period (January-September 2023) last year.
● Gurugram, with 64% share contributed highest in the leasing activity in Q3 2024. Within Gurugram, Gurugram SBD topped the chart with 49% of the city leasing coming from this micromarket. NOIDA stood second with 27% share in the overall leasing followed by Delhi with 9% share.
● The flexible workspace segment led the leasing activity with 50% share in absorption in Q3 2024, followed by the Engineering & manufacturing and BFSI sectors with 9% & 7.8% share in the overall leasing activity.
● Large (100,000 sq. ft. or more) & mid-sized (25,000-99,999 sq. ft.) lease transactions dominated the leasing activity in Q3 2024 with 54% & 31% share, respectively.

Mumbai
● Mumbai recorded 3.2 mn sq. ft. of absorption in Q3 2024, registering a 35% increase YOY. Mid-sized deals (25,000 sq. ft. to 99,999 sq. ft.) continued to dominate the leasing activity, with a 36% share.
● YTD absorption stood at 9.7 mn sq. ft., just slightly below the current peak full year 2023 absorption of 10.1 mn sq. ft. Mumbai is paving its way to record a decadal peak absorption in 2024 of about 12 mn sq. ft.
● Mumbai witnessed 1.6 mn sq. ft. of new supply in Q3 2024, almost double of that witnessed in the corresponding period previous year.
● The BFSI sector continued to be the conventional and majority demand driver in Mumbai with a 32% share followed by the tech sector garnering a 17% share in Q3 2024.
Pune
● Pune recorded 2.0 mn sq.ft. of gross absorption in Q3 2024, registering a 42% YOY increase. This was driven by financial services occupiers pre-leasing of large spaces, totaling 1.1 mn sq.ft.
● The city witnessed YTD absorption of 6.6 mn sq.ft., with a projection to end the year with a gross absorption of 9 mn sq.ft.
● The BFSI sector led the leasing activity, accounting for a 55% share in Q3 2024 absorption. IT-BPM accounted for 16% of the total leasing activity followed by Engineering and manufacturing with a share of 12%.
● Large-sized deals (100,000 sq. ft. or more) continued to dominate the leasing activity with a substantial 55% share in Q3 2024.
Hyderabad
● The city witnessed a significant rise in YTD absorption, reaching 8.7 mn sq. ft., registering a 34% YOY growth. In Q3 alone, gross leasing activity totaled around 3 mn sq. ft., primarily driven by mid-sized deals (25,000-99,999 sq. ft.), which accounted for 1.6 mn sq. ft. and represented 54% of the overall leasing activity.
● IT-BPM maintained its stronghold on leasing activity, capturing 52% of the total market share with 1.5 mn sq. ft. absorbed in Q3 2024. The city has also experienced a notable uptick in demand for flexible workspaces, with 0.6 mn sq. ft of office space leasing activity accounting for 35% YOY growth.
● In Q3 2024, the city witnessed a supply of 5.8 mn sq. ft., marking an increase of 8% on yearly basis. The SBD II micromarket (Gachibowli, Nanakramguda, Kokapet) contributed the largest share, accounting for 67% of the new supply, while SBD I accounted for about 33%.

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