India Office Leasing Up 14% in 2024, Hitting Record High for Third Straight Year: Colliers

Office leasing activity across India’s top six cities totalled 66.4 million square feet (6.2 million square metres) in 2024, climbing 14 percent to hit a record high for a third straight year, according to Colliers.

Bengaluru drove demand for Grade A office space with its highest-ever leasing volume of 21.7 million square feet, marking a nearly 40 percent surge, the consultancy said in a release. The IT hub accounted for one-third of total space uptake in 2024.

Other key markets saw heightened demand as leasing activity jumped 43 percent to 10 million square feet in Mumbai and shot up 56 percent to 12.5 million square feet in Hyderabad, with both cities witnessing double-digit annual demand growth for the first time.

“2025 demand can potentially stabilise at elevated levels and annual space uptake exceeding 60 million square feet is likely to be the new norm over the next few years,” said Arpit Mehrotra, managing director of office services at Colliers India.

Finishing Strong

The fourth quarter saw the highest leasing of the year at 19.7 million square feet, up 14 percent from the previous quarter. Hyderabad and Bengaluru led activity by collectively contributing 54 percent of India office leasing during the final quarter, according to Colliers.

Among the top six cities, fourth-quarter leasing was highest in Bengaluru at 6.6 million square feet. Quarterly demand growth was highest in Mumbai at 71 percent, followed by Hyderabad at 41 percent.

In terms of supply, the fourth quarter ushered in 15.9 million square feet of new completions, bringing the yearly total to 53.3 million square feet, up 6 percent.

Bengaluru and Hyderabad were the main contributors of new supply during 2024, accounting for 54 percent. With demand exceeding new supply across most cities, overall vacancy levels fell 80 basis points on an annual basis as rentals rose 5 percent, Colliers said.

Flex Fuels Uptake

At 4.7 million square feet, flex office spaces set their highest-ever quarterly leasing mark, accounting for 24 percent of Grade A uptake in the last three months of 2024.

“Annual flex space leasing has comfortably surpassed the 10 million square feet mark for the first time, eventually registering Grade A space uptake of 12.5 million square feet in 2024, a remarkable 45 percent year-on-year increase,” said Vimal Nadar, senior director and head of research at Colliers India. “Delhi-NCR, followed by Bengaluru, together accounted for over half of the total flex space leasing during the year.”

The occupier preference for managed office spaces bodes well for leading operators, who are likely to increasingly foray into second- and third-tier cities in 2025 and expedite fundraising plans through primary markets, Nadar said.