Office Space Trends: Shifts in Supply and Leasing Dynamics

The latest report from real estate consultant Vestian highlights a 4% annual drop in new office space supply across major Indian cities, with a 17% rise in leasing activity. Key demand drivers include the BFSI and flexible spaces sectors, while IT-ITeS sector demand wanes.

According to a recent report by real estate consultant Vestian, new office space supply across seven major Indian cities decreased by 4% in the July-September quarter, totaling 12.8 million square feet. Meanwhile, gross leasing of workspace surged by 17% to 18.61 million square feet, indicating a significant rise in demand.

The report noted varying trends across different cities: Hyderabad experienced a 25% drop in new office space, while Bengaluru saw a 33% increase, and Delhi-NCR recorded a 360% surge. In contrast, Pune, Mumbai, and Chennai faced declines or stagnation in new supply. Kolkata reported no fresh Grade-A office space supply during the period.

The BFSI and flexible spaces sectors emerged as primary demand drivers, contributing 39% to the pan-India absorption rate in Q3 2024—up 20% from the previous quarter. However, the IT-ITeS sector's share decreased significantly, signaling potential changes in the demand-supply dynamics across the nation.