4 out of 6 top cities experienced over a 20 per cent rise in office leasing from Aril to June, indicating strong confidence among occupiers and positive market sentiment. Bengaluru and Mumbai emerged as leaders among Chennai, Delhi-NCR, Hyderabad and Pune in office demand, jointly accounting for more than half of India’s total leasing activity.
The office market continued its robust performance with a significant uptick in leasing activity of 15.8 million square feet across these cities. This marks a notable 16 per cent increase from the previous quarter, according to a report released by Colliers India. Demand in these cities was driven by occupiers in various sectors, including BFSI, Technology, and Engineering and manufacturing.
Following a sustained period of consistent demand, Mumbai experienced a substantial increase in leasing activity of 3.5 million square feet this quarter. This figure represents double the amount compared to the same period in 2023, primarily driven by solid demand from newly completed office spaces throughout the quarter.
Speaking on the report’s findings, Arpit Mehrotra, Managing Director, Office Services, India, Colliers, said, “Driven by consistent demand across consecutive quarters, 2024 has already seen impressive leasing activity to the tune of 29.4 million square feet of office space, marking a 19 per cent increase compared to the same period last year. The demand for quality office spaces continues to surge, reflecting the confidence of occupiers and investors alike.”
“Anticipated easing of global financial headwinds and continued resilience in the domestic economy augurs well for sustained growth in India’s office market. A strong H1 performance has set the tone for office space demand to comfortably surpass 50 million square feet for the third consecutive time in 2024,” Mehrotra added.
During this period new office supply across the top 6 cities increased by 6 per cent year-over-year, reaching 13.2 million square feet. Mumbai contributed 30 percent of this total, followed closely by Hyderabad, which had a 27 percent share. Notably, due to the completion of several significant projects, Mumbai saw a new supply of 4.0 million square feet in Q2 2024, marking the highest quarterly increase in supply over the past 3-4 years. Overall, the Mumbai office market has experienced robust growth in the first half of 2024, driven by significant project completions and the fulfilment of substantial pre-commitments.
The technology, engineering, and manufacturing sectors continued to lead, together constituting nearly half of the total office space demand for the quarter, according to the report.
Flex Space Leasing
Flex spaces also experienced robust leasing activity, reaching 2.6 million square feet across the top 6 cities, the highest recorded in any quarter. Bengaluru and Delhi-NCR accounted for 65 per cent of the flex space leasing, underscoring the increasing demand for flexible workspaces in these markets.
“Overall office leasing continues to remain broad based in the first half of 2024. Although, with a 25 per cent share, Technology sector drove office demand during H1 2024, leasing activity by occupiers from BFSI and Engineering & Manufacturing sectors witnessed healthy traction,” said Vimal Nadar, Senior Director and Head of Research at Colliers India.
Nadar added: “Flex space activity across the major cities continues to grow from strength to strength. Flex operators have already leased about 4.4 million square feet of office space in H1 2024, underscoring the occupiers’ continued preference for flex spaces. This also reflects the evolving needs for agility and adaptability in the modern business environment.”
According to the report, rental rates have risen compared to the previous year but have remained largely steady quarter over quarter.
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