The demand for Grade A office spaces in India's top six cities grew by 23% in the first three quarters of 2024, reaching 46.7 million sq ft of leasing activity, according to a Colliers report. Bengaluru and Hyderabad led the market, with Bengaluru recording its highest-ever quarterly leasing at 6.3 million sq ft. Supply growth matched this momentum, with 14.4 million sq ft of new completions in Q3 2024. Key sectors driving demand included Technology and BFSI, while large-sized deals dominated leasing activity. Despite high demand, vacancy rates remained steady at around 17%, indicating a balanced market.
The demand for Grade A office spaces across India's top six cities surged by 23% in the first three quarters of 2024, totalling 46.7 million sq ft of leasing activity. According to a report by Colliers, strong momentum in the first half of the year continued into Q3 2024, with 17.3 million sq ft of office space taken up, reflecting a 31% year-over-year (YoY) growth. Bengaluru and Hyderabad led the charge, accounting for over half of the total leasing activity during this period. Bengaluru, a dominant force in the office space market, recorded its highest-ever quarterly leasing at 6.3 million sq ft. Meanwhile, Pune also performed notably well, registering a significant jump in leasing activity at 2.6 million sq ft, which is 2.6 times the space taken up compared to Q3 2023.
Supply growth followed a similar trajectory, with 14.4 million sq ft of new completions in Q3 2024, marking a 33% YoY increase. Bengaluru and Hyderabad contributed significantly, accounting for 64% of the new supply in the quarter. Delhi-NCR also saw a robust supply infusion, reaching its highest quarterly addition in eight quarters, with 3.3 million sq ft of new space added. Within Delhi-NCR, the South Delhi micro market saw the most growth, contributing nearly 70% of the city's incremental supply, thanks to a few significant project completions.
Leasing activity in 2024 benefited from impressive demand across various markets and sectors, continuing a trend seen over the past 2-3 years. Key markets such as Bengaluru, Hyderabad, and Mumbai have either matched or exceeded their 2023 leasing levels within the first three quarters of 2024. A key driver of this growth has been large-sized deals of over 1 lakh sq ft, which accounted for 65% of the total leasing activity in Q3 2024. Bengaluru witnessed the highest proportion of large deals, making up 81% of its leasing, followed closely by Pune with 71%, driven primarily by the Technology and BFSI (Banking, Financial Services, and Insurance) sectors.
The Technology sector accounted for about 25% of the overall office space demand in Q3 2024. BFSI occupiers and flex space operators also contributed significantly to the leasing activity. Interestingly, Bengaluru and Pune outpaced Mumbai in BFSI leasing, contributing 39% and 25%, respectively, of the total BFSI demand during the quarter. Flex spaces also saw substantial activity, with 3.4 million sq ft leased, representing 20% of the overall demand. Key micro markets like SBD 1 in Bengaluru, Golf Course Road in Delhi NCR, CBD in Pune, and SBD in Hyderabad were prominent hubs, accounting for 54% of the leasing by flex space operators. Despite high demand, vacancy levels remained steady across major markets, with India's overall vacancy rate hovering at around 17% by the end of Q3 2024.
In conclusion, the demand for Grade A office spaces in India's top six cities saw a remarkable 23% surge in the first three quarters of 2024, driven by strong leasing activity in Bengaluru, Hyderabad, and Pune. This growth, alongside a significant increase in new supply, reflects the robust momentum in the office space market, particularly in the Technology and BFSI sectors. Despite high demand, vacancy rates remained stable, showcasing a balanced market environment.
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