by THO
The year 2024 is likely to register 83-85 mn sq ft of gross leasing of office space across eight major cities, which will be an almost 13% increase compared to the peak volume of 2023, a report by Cushman and Wakefield said.
The eight cities included Bengaluru, Hyderabad, Mumbai, Delhi-NCR, Chennai, Pune, Kolkata and Ahmedabad.
Since 2022, India’s office real estate has consistently witnessed more than 70 million square feet of gross leasing volume (GLV) across the top 8 cities. The report said the current year 2024 is likely to register a historic high of 83-85 million square feet of GLV.
The report showed that growth was driven by healthy volumes seen in the IT-BPM, BFSI, Engineering & Manufacturing (E&M), and flex operator spaces.
Net absorption of office space is likely to end the year with about 45 mn sq ft across the top 8 cities. Given the real estate industry’s scenario in the USA and China, India is seen as the biggest driver of office leasing volume in the world. Within APAC, India is likely to end the year with nearly 70% of the region’s total net absorption, it said.
Gross leasing volume could be relatively lower in 2025, at 74-76 mn sq ft, although it will remain considerably above the 70+ mark for the fourth consecutive year. It noted that most of the pent-up demand from the increasing return-to-office (RTO) of the erstwhile hybrid workforce was captured during the 2022-24 period.
“Fresh leasing of space, an indicator of growing business activity in India, has been the biggest contributor to GLV. For the full year 2024, a fresh lease is likely to account for nearly 70 per cent, stemming from new entrant GCCs (Global Capability Centres) and expansion in operations of domestic firms,” Cushman & Wakefield said.
GCC leasing to continue its positive momentum in India
Global capability centres (GCCs), considered to be an important driver of India’s office absorption in recent years, are likely to account for around 30% of the total GLV in 2024, thereby piping the share it had achieved before COVID-19 in 2019.
Also read: Over 1,800 GCCs lease more than 240 mn sq ft office space across top 7 cities: Report
India remains the most preferred destination for GCCs by multinational firms in the West and advanced Asia Pacific region. The ongoing expansion of established GCCs highlights global companies’ confidence in India’s workforce and operating environment, emphasizing their long-term commitment to the Indian market.
While the overall GLV of office space for 2025 is expected to remain lower than 2024, GCCs are expected to deliver higher volume in 2025 (compared to 2024), with an expected share of around 35% in the GLV of the top-8 cities, it noted.
Grade-A office rents
The expected surge in leasing across top-grade assets in 2024 and 2025 has been putting upward pressure on rents across prime micro-markets. Most of the new supply coming in 2025 is concentrated around prime micro-markets, suggesting that overall rents could witness a rise.
However, the report said the rise is anticipated to be moderate owing to a consistent influx of supply, thereby helping a tenant-favourable market sentiment to persist for some time.
Also Read: Delhi-NCR is 6th most expensive office market in Asia Pacific, Mumbai is ranked 8th
Veera Babu, Managing Director, Tenant Representation, Cushman & Wakefield said, “2024 is shaping up to be a record-breaking year for India’s office sector, with gross leasing volumes expected to reach around 85 mn sq ft and net absorption of around 45 mn sq ft —the highest ever recorded in Indian commercial real estate. This momentum is largely driven by fresh leasing, accounting for over 70% of activity, and the growing presence of Global Capability Centers (GCCs), which contribute nearly 30% of total leasing and are projected to rise to 35% in 2025.”
Outlook 2025
In 2025, occupiers should anticipate limited Grade-A space in core markets, prompting the need for pre-leasing strategies to secure premium locations. Rental growth in prime markets may shift some demand to emerging micro-markets, where supply and talent pools align, the report added.
