Office space absorption hits record high in 2024: Bengaluru, Hyderabad, Mumbai drive growth

Buoyed by a renewed demand for office space from corporate entities and investors, office leasing activity scaled a new peak in 2024. At a time when demand for residential units is showing signs of distress, office leasing activity surged to a new record high.

Latest data from real estate advisory firm Savills India shows, during the year about 75.2 million sq. ft (msf) of office space was leased in India’s top six markets. The figure stood at 21% higher levels than the record leasing activities that took place last year — marking another feat. In 2023, some 62.3 msf of office space were leased. 

Among the office space markets, Bengaluru stands at the top with 22.9 msf or 47% higher than the 15.6 msf that were leased last year. Another hub for technology companies — Hyderabad stands second with 13.1 msf — 52% higher than 8.6 msf gross leasing it reported last year. The largest real estate market in the country — Mumbai — saw gross leasing surging by 21% year-on-year to 12.2 msf in 2024.

The market in the national capital region of Delhi (Delhi-NCR), which used to be the second largest market for office leasing, reported a dip. With its 11.3 msf office leasing in 2024, Delhi-NCR recorded a 10% drop in leasing activities and now stands at the fourth spot. While Pune grew 20% YoY to 8.5 msf and Chennai, after a 14% YoY dip is now at the sixth place with 8.3 msf leased during the year. 

“The Indian office market has demonstrated impressive resilience and growth, reaching a historic high in gross absorption with 75.2 million sq. ft in 2024. Bengaluru, Hyderabad, and Mumbai have led the way, showing robust demand for quality office spaces. This growth fosters a positive outlook for the sector as we approach the coming year, driven by the continued expansion of key industries and the resilience of the Indian economy.” said Naveen Nandwani, Managing Director, Commercial Advisory and Transactions, Savills India.

According to Savills, sectors like tech, BFSI, and flexible workspaces emerged as the top three contributors to leasing activity in 2024, accounting for 33%, 18%, and 17% of the total share, respectively. According to Arvind Nandan, MD, Research & Consulting, Savills India, for the second consecutive year, gross absorption has reached an all-time high, “Reflecting business robustness and confidence driven by strong economic growth. With key factors such as urbanisation and infrastructure development working in India’s favour, demand is expected to grow even further in the coming years,” he says. 

Despite surge in demand, new supply remained muted. During 2024, new supply declined 14% YoY to 46.2 msf from 53.4 msf in 2024. Close to 75% of this new supply came from Bengaluru, Hyderabad, and Pune. However, leading markets like Bengaluru (-21% YoY), Chennai (-74%), Delhi-NCR (-47%) and Hyderabad (-18%) recorded steep fall in new projects. Only Mumbai (116%) and Pune (59%) witnessed a growth in new supply.