According to Knight Frank India's latest report, flexible office space leasing in Bengaluru dropped by over 40% in the first half of 2024, falling from 2.9 million square feet in H1 2023 to 1.7 million square feet. However, flexible workspaces remain valuable for startups and companies needing adaptable office solutions. Nationally, co-working spaces accounted for 72% of flex space transactions. Despite the drop in flex leasing, Bengaluru's overall office space market grew by 21%, reaching 8.4 million square feet. This growth is driven by the establishment of Global Capability Centers (GCCs) and increased leasing by IT service companies.
According to a recent report by Knight Frank India, flexible office space leasing in Bengaluru dropped significantly in the first half of 2024 compared to the same period last year. Leasing volume fell from a peak of 2.9 million square feet (approximately 271,000 square metres) in the first half of 2023 to 1.7 million square feet (approximately 158,000 square metres) in 2024, a decrease of over 40%.
However, the report cautions against interpreting this as a complete decline in flexible workspaces. The significant drop can be partly attributed to a high volume of flexible space leasing, reaching 2.9 million square feet in the first half of 2023. Flexible workspaces, also known as co-working spaces, are still seen as valuable for startups and companies seeking short-term or adaptable office solutions.
Nationally, co-working spaces accounted for a larger share (72%) of all flex space transactions in the first half of 2024 compared to the previous year (58%). This suggests an ongoing preference for shared office environments with customizable desks and amenities, representing a total of 7.2 million square feet (approximately 670,000 square metres) leased across eight major cities in India.
Despite the decline in flexible space leasing, Bengaluru's overall office space market remains robust. The city witnessed a 21% increase in office space leasing compared to the first half of 2023, reaching 8.4 million square feet (approximately 780,000 square metres). This accounts for 24% of the total office space demand across eight major Indian cities, including Mumbai, Kolkata, Chennai, Hyderabad, Pune, Delhi, and Ahmedabad.
This growth is attributed to the establishment of Global Capability Centers (GCCs) by major corporations. GCCs are overseas branches of multinational companies that handle specific business functions, such as technology development or customer service. Bengaluru's strong technology infrastructure and diverse talent pool are attracting companies seeking to set up long-term operations in India.
GCCs emerged as the leading occupiers of office space in the first half of 2024, leasing a total of 4 million square feet (approximately 372,000 square metres) nationally, compared to 2 million square feet (approximately 186,000 square metres) in the same period last year. In Bengaluru, companies like Google, Qualcomm, ANSR, Tekion, and Samsung are expanding their operations, contributing to the city's strong office space demand.
The report also highlights a rise in traditional office space leases by established companies, particularly in the IT sector. Third-party IT service companies in Bengaluru leased 1.3 million square feet (approximately 120,000 square metres) in the first half of 2024, a 32% increase year-on-year. This suggests that many companies are moving towards securing dedicated office space to accommodate long-term growth plans.
The overall trend in Bengaluru's office market points to a shift in workspace preferences. While flexible workspaces remain relevant for startups and companies needing short-term solutions, established companies are increasingly opting for traditional office leases for stability and scalability. The city's strong technology ecosystem and growing number of GCCs are expected to continue driving demand for office space in the coming years.
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