Record-breaking Office Space Boom in India: Q3 2024 Surges Ahead

India's office space transactions hit a record 19 mn sq ft in Q3 2024, the highest since 2018. Global Capability Centers led the surge, followed by local businesses. Bengaluru was the top city with 5.3 mn sq ft leased. Despite robust demand, some markets saw declines in activity.

In an unprecedented surge, office space transactions in India hit a record 19 million square feet in the third quarter of 2024, marking the highest quarterly absorption since the first quarter of 2018, according to a report from Knight Frank India.

Global Capability Centers (GCCs) were the leading contributors, accounting for 7.1 million square feet, or 37 percent of the transacted volume this quarter. Businesses focused on the Indian market followed, securing 6.6 million square feet amid growing economic confidence. Bengaluru emerged as the top contributor with 5.3 million square feet of leasing, 28 percent of the total volume across eight major cities.

The city experienced a 158 percent year-on-year growth. Other significant markets included NCR and Chennai, which saw 26 and 35 percent growth respectively. Knight Frank India's Chairman, Shishir Baijal, expects the trend to continue, with leasing potentially reaching 70 million square feet by the year's end—a 20 percent growth over the previous record. While key cities like Bengaluru thrived, others such as Hyderabad and Pune reported declines.

Though demand was robust, office space completions remained unchanged at 11.5 million square feet compared to last year. In stark contrast, Pune recorded a 531 percent year-on-year surge in completions. Rental values showed steady growth, with Bengaluru seeing a 7 percent year-on-year increase, while Chennai led with a 10 percent rise. This trend marks nine consecutive quarters of stability or growth, indicating strong demand and an increased focus on occupier wellness and ESG compliance.

Viral Desai, Senior Executive Director at Knight Frank India, highlighted the strengthening demand for office space as more companies bring employees back, either partially or fully. He noted that rental growth remains robust, bolstered by sustained volume growth and increasing development activity focused on wellness and ESG priorities.

(With inputs from agencies.)