India’s office leasing market is expected to achieve a milestone in 2024, with gross leasing volumes (GLV) projected to reach 83–85 million sq ft, marking a 13% year-on-year increase over the previous peak in 2023, a report said on Monday.
The growth is primarily attributed to strong demand from sectors such as IT-BPM (information Technology and business process management), BFSI (banking, financial services and insurance), engineering and manufacturing (E&M) and flexible workspace operators, the report by Cushman & Wakefield stated.
While GLV in 2025 is expected to be at 74–76 million sq ft, it will still remain significantly above the 70-million-sq-ft mark for the fourth consecutive year. India’s office real estate has consistently been witnessing more than 70 million sq ft of GLV since 2022 across the top-8 cities.
In 2024, contribution of fresh leasing has remained strong with over 70% share, while pre-commitments have started to surge as occupiers want to book quality spaces in advance.
Most of the pent-up demand from increasing return-to-office of the erstwhile hybrid workforce have been captured during the 2022-24 period. However, other drivers such as influx of new GCCs (global capacity centres), growing flex operator footprint, rising number of unicorns, and growth of E&M sector will continue to remain intact, the report said.
Net absorption is projected to hit an all-time high of 45 million sq ft across top eight cities in 2024.
Despite record demand, the supply of office space has lagged behind. Only around 48 million sq ft of new space is expected to be delivered in 2024, tightening vacancy rates across India’s top office markets. In 2025, supply is anticipated to pick up, however the core markets across the cities will have low vacancy rate in 2025, it said.
Amid a challenging global real estate environment, India is emerging as a key growth driver. The country is expected to account for nearly 70% of the Asia-Pacific (APAC) region’s total net absorption of office space in 2024.
Fresh leasing of space, an indicator of growing business activity, has been the biggest contributor to GLV. For the full year 2024, fresh lease is likely to account for nearly 70%, stemming from new entrant GCCs and expansion in operations of domestic firms.
Pre-commitments in under-construction space also rose sharply, with the volume likely to close the year at three times compared to the previous year. Interestingly, more than 70% of the pre-commitment activity has been recorded in prime sub-markets within cities, suggesting that occupier preference for prime sub-markets continues to remain high, it said.
Fresh leasing is expected to remain strong in 2025 as new Grade-A supply hits the market at higher frequency. Nearly 75% of the existing pre-commitments (slated for 2025) are in projects concentrated around prime sub-markets, suggesting that prime markets will continue to witness relatively tight vacancies.