Office space net absorption rise 44% yoy in Q1, 2024

The Indian office space market recorded a net absorption of 11.5 million square-feet (msf) across the top 8 cities during January-March 2024 (Q1, 2024) quarter. It was the third-highest level recorded in the last five years. The figure is 44% higher than the net absorption of office spaces in Q1, 2023.

Bengaluru and Mumbai emerged as the leading markets, absorbing 3.6 msf and 2.5 msf of office space, respectively, followed by Hyderabad at 1.6 msf, Delhi-NCR at 1.5 msf and Pune at 1.3 msf. While Ahmedabad and Kolkata each reported 1 msf, and Chennai at 0.8 msf, data from Cushman & Wakefield shows. Net absorption is new space occupied during the period, adjusted for exits, if any.

Data shows, Gross Leasing Volume (GLV) also remained robust at over 20 msf, a 20% decrease q-o-q but a steep rise of 33% on y-o-y basis. Gross leasing volume, which factors in all leasing activity in the market, including renewal of contracted term by corporates, is an indication of overall market activity. This quarter’s figures signify a resilient market with sustained interest in office space, analysts from Cushman & Wakefield note.

Nearly a third of the entire India GLV was recorded in just one city, Bengaluru (6.7 msf), followed by Mumbai (4.8 msf) with a share of one-quarter. The two cities combined had a share of over 57% in total leasing volumes for the first quarter. A significant contribution to Bengaluru’s healthy leasing volume was 4.8 msf of fresh leasing activity, and the city accounted for 33% of total fresh space leasing across the top-8 markets. The city also received close to 2.0 msf of pre-commitments during Q1, 2024 - making it the largest contributor amongst all. 

"The Indian office market is experiencing a robust momentum. We haven't witnessed 20 MSF of leasing being recorded for two consecutive quarters in recent history. This strong performance may signal a shift and has the potential to become the new standard for the Indian market. The strong leasing, coupled with net absorption of 11.5 MSF– the third highest in the past five years (the previous being in Q4 2023 and Q2 2019) – signifies a surge in tenant interest for office space. As witnessed in the previous quarters, the impressive surge in office demand is primarily driven by fresh leasing. We are confident that a balanced supply pipeline and continued tenant demand will propel further growth in the Indian office market,” says Anshul Jain, Chief Executive, India & Southeast Asia and Head of Asia Pacific Tenant Representation at Cushman & Wakefield.

According to Veera Babu, Managing Director, Tenant Representation, India at Cushman & Wakefield, the tightness in vacancy rates, particularly in key markets like Bengaluru, Pune, and Mumbai, is noteworthy. “This trend persists despite new supply additions in most cities, indicating a strong and growing demand for office space. This could push occupiers to act proactively by pre-committing in the upcoming quarters, ensuring they secure the right space for their needs. Overall, the outlook for the office sector remains positive for the year ahead.”