Office Space Dynamics Shift Amidst Leasing Growth

The supply of office space in seven major Indian cities decreased by 4% in Q3 2024, while gross leasing rose by 17%, driven by the BFSI and flexible spaces sectors. However, significant declines in new supply and leasing were reported in several cities, indicating shifting demand dynamics.

A recent report by real estate consultant Vestian reveals a dynamic shift in the office space market across seven major cities in India. The supply of office space decreased by 4% to 12.8 million square feet in the July-September quarter, but gross leasing increased by 17% to 18.61 million square feet. This suggests a strong demand for prime workspace despite the drop in new supply.

The data shows a 25% decline in new office space supply in Hyderabad, a striking 360% increase in Delhi-NCR, and a significant new supply surge of 33% in Bengaluru. Meanwhile, Pune saw a 26% decrease, while Mumbai's figures held steady. Kolkata reported no new Grade-A office space supply for the quarter.

Key drivers of demand were BFSI and flexible spaces operators, accounting for 39% of the national office space absorption in Q3 2024. Conversely, the IT-ITeS sector's share dropped from 38% to 23% from the previous quarter. This shift may alter the demand-supply balance across the country, Vestian noted.