Office market at 49.56 mn sq. ft of net absorption in 2024

MUMBAI, JANUARY 03, 2025: In the calendar year 2024, India's office market has become a key hub for global companies expanding their workforce and real estate footprint, as evidenced by a historic peak in net absorption reaching 49.56 million sq. ft. The year concluded with an exceptional fourth quarter (October-December 2024), marked by record net absorption figures of 18.53 million sq. ft, underscoring the robust growth in this sector. The top seven cities’ (Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune) quarterly net absorption figures had Bengaluru posting its best quarter, while accounting for a 36.1% share, signalling the strong occupier demand that remains sustained for this city. Hyderabad jumped to the second spot with a 16.0% share followed by Delhi NCR with 15.4% and Chennai with 11.5% share in the quarterly net absorption numbers.

For the full year (January-December 2024), Bengaluru led the charge with 2024 being its best year yet in net absorption terms while Mumbai also saw decadal high numbers. Strong annual performance across Delhi NCR and Hyderabad also contributed to the continued growth momentum in the office market. These four cities accounted for 77.8% share of the annual net absorption number in 2024.

Net Absorption (million sq. ft)

Source: Real Estate Intelligence Service (REIS), JLL Research

“In 2024, India's office market shattered expectations, with leasing activity across the top seven cities reaching an unprecedented 77.22 million square feet—a 22.6% year-on-year increase, marking the highest annual leasing ever recorded. Global companies played a crucial role, driving 58.6% of leasing activity, as India remains central to their real estate expansion plans. Global Capability Centres (GCCs) had a standout year, capturing 35.9% of the market with approximately 28 million square feet leased. As India's position as the 'office to the world' strengthens, its focus on AI and emerging technologies, alongside engineering R&D capabilities, is expected to further propel demand, making it a key destination for headcount growth and innovation over the next decade," said Dr Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.

Q4 2024 turned out to be the best performing quarter in terms of gross leasing at 23.80 million sq. ft, easily surpassing the previous peak recorded in the same period a year ago, by a factor of 13.6%.

Flex hit the as-predicted leasing number of over 15 million sq. ft in 2024, another peak in this sector’s performance and showcasing its continued growth and contribution to India’s office market amid the evolving workplace and portfolio strategies across industries. The flex segment had a substantial 19.8% share in the annual leasing numbers, its best share underscoring the momentum in this segment.

"As we close out 2024, the Indian office market continues to shine as a pivotal hub for global occupiers, reaching historic net absorption levels of 49.56 million square feet. Bengaluru has emerged as a standout, achieving a remarkable year-on-year net absorption increase of 63.6%, firmly establishing its market-leading position. The tech sector's partial recovery, claiming 25.8% of demand, alongside a robust BFSI and manufacturing/engineering presence, reflects the market's diverse strength. The Q4 surge, spearheaded by tech at 30.6% and followed closely by flex space at 18.5%, underpins the dynamic and sustained demand across segments. As we look ahead, the expansion of Global Capability Centers (GCCs) in core markets will be pivotal, with quality real estate assets and talent availability driving this growth. With changing workplace dynamics fuelling occupier demand, particularly in financial services, manufacturing, and tech outsourcing, India’s office market is poised for continued upward momentum," said Rahul Arora, Head - Office Leasing & Retail Services, Senior Managing Director (Karnataka, Kerala), India, JLL.

With a strong kick in the year-end by technology based GCCs, they stood as the biggest sub-segment by share in the overall GCC leasing volumes. This has been driven by large volumes of AI and related domain work increasingly coming into the country, chasing the quality talent pool. BFSI and Manufacturing/engineering GCCS have also closed the gap in recent times and were not far behind in terms of their contribution, showcasing increasing demand across a wider spectrum of R&D and cutting-edge innovation work by GCCs.

Bengaluru led both in terms of the quarterly leasing number as well as full year performance, underlining its continued dominance in the India office ecosystem. Strong year-end leasing numbers were also seen in Delhi NCR, Hyderabad, Chennai, and Mumbai.

On a full-year comparison, gross leasing volumes were highest ever in Bengaluru, Delhi NCR, Mumbai, and Pune underlining the strong market momentum that prevailed throughout during the year. Hyderabad and Chennai also saw their second-best annual leasing numbers in 2024 with the previous peaks being 2019 and 2023, respectively. Kolkata also saw its second-best leasing performance in 2024, after the previous year.

Q4 2024 was a strong finish across all cities, with the YoY being stronger across all, barring Pune, Chennai and Kolkata. In fact, Bengaluru saw its best-ever quarterly gross leasing numbers in Q4.

Gross Leasing (million sq. ft)

Source: Real Estate Intelligence Service (REIS), JLL Research

Overall vacancy across the top seven cities dropped to a three-year low of 16.3% and was down by 60 bps QoQ. The historic high net absorption amid balanced supply in 2024 has supported the vacancy decline. Vacancy was down q-o-q across all cities, barring Pune.

In 2024, India's office market reached unprecedented heights, exceeding 77 million sq ft in occupier leasing volumes and outstripping even the most optimistic forecasts. As the "office to the world," India has become crucial for global firms seeking headcount augmentation and capacity growth, while domestic occupiers remain optimistic due to the country's economic resilience and growth opportunities. This growth trajectory is significantly influenced by the expansion activities of Global Capability Centers (GCCs), which are expanding their footprint across core markets and focusing on quality real estate assets. As GCCs bolster their presence, talent availability and costs emerge as key considerations. India’s role as an innovation hub, particularly in AI and emerging technologies, alongside a strengthened focus on engineering R&D, is expected to drive demand over the next decade. Furthermore, the growth of flexible workspaces, propelled by strong occupier demand and evolving workplace dynamics, alongside domestic occupiers from the financial services, manufacturing, and tech outsourcing sectors, is set to continue driving momentum in the office market.

*Gross leasing refers to all lease transactions recorded during the period, including confirmed precommitments, but does not include term renewals. Deals in the discussion stage are not included.

**Net absorption is calculated as the new floor space occupied less floor space vacated. Floor space that is pre-committed is not considered to be absorbed until it is physically occupied.

JLL is India’s premier and largest professional services firm specialising in real estate. The Firm has grown from strength to strength in India for the past two decades. JLL India has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi, and Coimbatore) and over 130 tier-II and III markets with a cumulative strength of over 15,000 professionals. The Firm provides investors, developers, local corporates, and multinational companies with a comprehensive range of services. These include leasing, capital markets, research & advisory, transaction management, project development, facility management and property & asset management. These services cover various asset classes such as commercial, industrial, warehouse and logistics, data centres, residential, retail, hospitality, healthcare, senior living, and education. For further information, please visit jll.co.in.