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Office leasing up 31% annually to 17.3 mn sq ft across top six cities in Q3 2024; Bengaluru and Hyderabad drive demand
Bengaluru and Hyderabad accounted for over half of the office leasing activity recorded during the June-September quarter of 2024, a report by Colliers said
The July-September quarter of 2024 recorded a 31% year-on-year growth in office leasing, pushing the tally to 17.3 million square feet across the top six cities, a report by property consultancy Colliers said on September 26.
Bengaluru and Hyderabad accounted for over half of the leasing activity during this period, alongside Bengaluru registering its highest ever leasing in any quarter at 6.3 million square feet, per the report. Meanwhile Pune, with 2.6 million square feet of leasing activity, recorded 2.6 times the space take-up compared to Q3 2023.
Also Read: Office leasing touches 33.5 mn sq ft in the first half of the year, up by 29%: JLL
Overall, in the first three quarters of the ongoing calendar year, India registered Grade A office space demand to the tune of 46.7 million square feet across the six major cities of Bengaluru, Hyderabad, Pune, Mumbai, Chennai and Delhi-NCR.
“Occupier confidence is reflected in continued higher uptake of large-sized deals of more than 1 lakh sq ft, accounting for 65% of total leasing in Q3 2024. Bengaluru saw 81% of its leasing through large-sized deals, while Pune followed closely with 71%, driven by the Tech and BFSI sectors,” said Arpit Mehrotra, Managing Director, Office Services, India, Colliers.
Supply keeps pace with demand
As per the report, with 14.4 million sq ft of completions in Q3 2024, overall new supply too followed the demand growth trajectory, registering 33% increase year-on-year. It added that Bengaluru and Hyderabad together delivered 64% of the quarter’s new supply.
Meanwhile Delhi-NCR also saw its highest quarterly supply infusion in the last 8 quarters, at 3.3 million sq ft. Within the region, South Delhi micro market with few significant project completions, accounted for almost 70% of the incremental supply of the city in Q3 2024, per the report.
With demand outpacing supply, vacancy levels remained range-bound across the major markets, with overall India vacancy continuing to hover around 17% at the end of Q3 2024, the report noted.
Sectorally, the technology industry drove around one-fourth of the overall office space demand during the quarter, followed by BFSI occupiers and flex space operators.
Interestingly, Bengaluru and Pune surpassed Mumbai in BFSI leasing, and accounted for a 39% and 25% share respectively in overall BFSI leasing during the quarter, per the report.
Flex office leasing touches new quarterly high
The report highlighted that the flexible office space segment recorded a new quarterly high of 3.4 million square feet in space take-up during Q3 2024, surpassing the previous high of 2.6 million square feet.
Select micro markets such as secondary business district 1 in Bengaluru comprising Koramangala, CV Raman Nagar, Internal Ring Road, Indiranagar, Rajajinagar and others; Golf Course Road in Delhi-NCR; central business district in Pune and secondary business district in Hyderabad accounted for about 54% of the leasing by flex space operators in Q3 2024.
“Notably, nearly half of the leasing by flex space operators was driven by large-sized deals exceeding 1 lakh sq ft, indicating a growing demand from large enterprises gaining scale,” said Vimal Nadar, Senior Director and Head of Research, Colliers India.
Overall, 2024 has already seen flex space leasing to the tune of 7.9 million square feet so far, marking a 20% year-on-year increase. Delhi-NCR and Bengaluru were the dominant flex space markets, collectively accounting for 55% of the demand this year, Nadar said.
