The office leasing market in India saw significant developments in 2024, marking a year of strong recovery and growth for the commercial real estate sector. As we begin 2025, it’s essential to reflect on the key trends, challenges, and opportunities that shaped office leasing across major cities like Bengaluru, Hyderabad, and Delhi-NCR. This article delves into the performance of the office leasing market in 2024, highlighting the surge in demand from Global Capability Centres (GCCs), the continued rise of flexible workspaces, and the increasing need for premium office spaces. While 2024 was a record-breaking year, several challenges, such as oversupply and vacancy rates, remain important considerations as we look ahead.

Record-Breaking Leasing Activity in Key Cities

The office leasing market across India’s top cities saw unprecedented growth in 2024, with Bengaluru, Hyderabad, and Delhi-NCR leading the charge. According to Knight Frank India, Bengaluru saw a record high of 21.8 million square feet leased in 2024, surpassing previous records. Meanwhile, Cushman & Wakefield (CW) reports that 88.5 million square feet of office space was leased across India’s top eight cities, marking a historic milestone. On the other hand, Savills India recorded 75.2 million square feet of office absorption in 2024, showing the varied range of leasing activity across the country.

In total, the office leasing market reached 75.2 to 88.5 million square feet across eight key cities, depending on the data source. This surge reflects the ongoing recovery in India’s economy and the high demand for office spaces driven by the technology, finance, and e-commerce sectors. Notably, Bengaluru and Hyderabad led the leasing activity, with Bengaluru contributing approximately 21.8 million square feet and Hyderabad witnessing 12.3 million square feet of office space leased.

• Bengaluru Leasing: 21.8 million square feet leased in 2024.
• Hyderabad Leasing: 12.3 million square feet leased in 2024.
• Leasing in Top 8 Cities: 75.2 to 88.5 million square feet leased in total, depending on the source.

Surge in Demand from Global Capability Centres (GCCs)

A significant factor driving this surge in leasing activity is the demand from Global Capability Centres (GCCs). Knight Frank India reports that GCCs accounted for 28% to 29% of the total office leasing activity in 2024, with cities like Bengaluru, Hyderabad, and Pune emerging as key hubs for these global business services. This demand is largely due to India’s strong talent pool and cost-effective operating environment, which continues to attract multinational companies to set up their operations here. Notably, Bengaluru saw around 10.5 million square feet of office space leased by GCCs in 2024, marking a substantial increase from previous years.

In addition to this, CBRE and Colliers India also report that the contribution of GCCs to the office leasing market has been rising steadily. CBRE notes that the share of GCCs in India’s overall office leasing market has increased by 5% year-on-year, from 25% in 2023 to 30% in 2024, further cementing India’s position as a preferred destination for global operations. The increasing number of multinational corporations setting up R&D, IT, and business operations in India has made GCCs a driving force in the office leasing market.

• GCC Contribution: 28% to 29% of total office leasing activity in 2024.
• Bengaluru’s GCC Leasing: Approximately 10.5 million square feet leased by GCCs in 2024.
• CBRE Report: GCCs contributed 30% of total office leasing activity in 2024 (up from 25% in 2023).

Flexible Workspaces on the Rise

Another key trend shaping India’s office leasing market is the increasing demand for flexible workspaces. The shift towards hybrid work models, accelerated by the pandemic, has led to businesses opting for more adaptable office solutions. According to Colliers India, co-working spaces accounted for approximately 24% of the total office leasing demand in 2024, particularly in cities like Bengaluru, Delhi-NCR, and Mumbai.

JLL India and CBRE India report that flexible leasing solutions are particularly favored by startups, small businesses, and large corporations looking to optimize their real estate costs while providing their employees with collaborative and innovative work environments. The rise of co-working spaces is helping companies scale their operations without long-term commitments, further driving leasing demand in top business hubs.

• Flexible Workspace Demand: 24% of total leasing demand in 2024 (reported by Colliers India).
• JLL India & CBRE India: Both report strong growth in demand for co-working and flexible office spaces, particularly in Bengaluru and Delhi-NCR.

Challenges - Oversupply and Vacancy Rates

Despite the strong performance of the office leasing market in 2024, certain cities face challenges such as oversupply and rising vacancy rates. ICRA predicts that by 2026, the city of Hyderabad may experience 24% vacancy rates due to the significant new supply expected in the city. The rapid pace of development in cities like Hyderabad, Bengaluru, and Mumbai is leading to an oversupply of office space, which could potentially outpace demand if business activity slows down in the coming years.

Colliers India also points out that while leasing volumes in cities like Bengaluru and Hyderabad remain strong, developers need to carefully align new office space supply with market demand to avoid creating an oversupply situation that could lead to higher vacancy rates and lower rents in the future.

• ICRA Report: 24% vacancy rate forecast for Hyderabad by 2026 due to oversupply.

Increased Demand for Premium Office Spaces

The demand for premium office spaces continues to rise across India, with Grade A office buildings seeing the strongest demand. Cushman & Wakefield (CW) and Knight Frank India highlight that cities like Bengaluru, Delhi-NCR, and Mumbai are experiencing high leasing activity in premium office spaces, which are increasingly seen as critical for attracting top talent and maintaining corporate brand presence.

These premium office spaces, which feature modern designs, energy-efficient technologies, and strategic locations, are being snapped up quickly in key urban areas. In 2024, the competition for these spaces contributed to a decline in vacancy rates in top cities, signaling continued demand for high-quality office environments. As ESG (Environmental, Social, and Governance) considerations grow in importance, businesses are also prioritizing eco-friendly and energy-efficient office buildings.

• Premium Office Space Demand: High demand in Bengaluru, Delhi-NCR, and Mumbai.
• Grade A Office Space Leasing: Increased leasing activity in premium spaces due to demand from multinational corporations.

The Future of Office Leasing in India

Looking ahead, India’s office leasing market is expected to continue its positive trajectory in 2025 and beyond, driven by the continued growth of GCCs, the rise of flexible workspaces, and strong demand from key sectors like technology, finance, and e-commerce. While cities like Bengaluru, Hyderabad, and Delhi-NCR will likely remain dominant in office leasing, developers will need to focus on delivering high-quality, sustainable office spaces to meet the evolving demands of businesses.

The increasing adoption of hybrid work models and the growing interest in sustainable office buildings will continue to influence the demand for office spaces. Companies will prioritize flexible, scalable office solutions that support collaboration and employee well-being while maintaining cost efficiency.

• Hybrid Work Models: Expected to continue influencing demand for flexible office spaces.
• Sustainability Trends: Increasing demand for eco-friendly office spaces and ESG considerations.

Conclusion

India’s office leasing market in 2024 has experienced unprecedented growth, driven by the resurgence of demand from GCCs, the rise of flexible workspaces, and the continued expansion of the technology, financial services, and e-commerce sectors. The record leasing volumes in cities like Bengaluru, Hyderabad, and Delhi-NCR reflect India’s strong position in the global commercial real estate landscape. Despite challenges such as oversupply and vacancy rates, the overall outlook for the market remains optimistic, with a growing emphasis on premium, sustainable, and flexible office spaces. As India strengthens its role as a global business hub, these trends will shape the future of the office leasing market for years to come.

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The insights in this analysis are based on data from leading industry sources, including Knight Frank India, Cushman & Wakefield (CW), Savills India, CBRE India, Colliers India, JLL India, and ICRA. These reports provide valuable leasing statistics and market research that inform the key trends, challenges, and outlook for India's office leasing market in 2024.

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