India’s office market has witnessed a remarkable rebound as it steps into 2024, clearly indicating the conclusion of the work-from-home phase. The year 2023 concluded with a gross leasing figure of 75 million square feet, marking a substantial 7% increase from the numbers in 2019. Major cities like Hyderabad, Bengaluru, Delhi NCR, Mumbai, Chennai, and Pune contributed significantly to this surge.
One notable highlight is the resurgence of Indian firms, which had been relatively dormant in the previous years. In 2023, these companies claimed over 40% of the leasing activity, a significant leap from the average of 25% observed between 2017 and 2019. Cushman & Wakefield’s recent report for the country highlighted this dynamic evolution of business needs and the growing allure of India’s office market.
Veera Babu, Managing Director (Tenant Representation) – India at Cushman & Wakefield, stated, “Various thriving markets in Bengaluru, Pune, and Hyderabad witnessed a significant share of home-grown companies leasing commercial spaces last year. Collectively, Indian firms secured approximately 10 million sq ft in these three cities, signaling a consistent growth in domestic demand.”
While these deals might not individually match the scale of those with large global corporations, the consistent growth in domestic demand is a promising trend. Indian firms are becoming more aspirational, seeking quality buildings and contributing to the reshaping of the commercial real estate landscape.
Nirupa Shankar, Joint Managing Director of Brigade Group, noted that while core markets like Whitefield are dominated by big multinational companies, micro-markets such as Bengaluru’s northern corridor are witnessing an influx of traditional Indian firms from sectors like automobile, engineering, and BSFI. These leases typically range between 15,000 sq ft and 20,000 sq ft, and this trend is expected to continue in 2024.
The growth in sectors like pharma, insurance, and health is expected to further fuel this surge in demand for office spaces. Tirumal Govindraj, CEO of RMZ Office, highlighted the outstanding performances of certain markets, with Chennai projected to hit 9 million sq ft in 2023, a significant increase from its 5 million sq ft market size.
Chennai and Pune nearly doubling their pre-pandemic averages, along with contributions from smaller markets like Ahmedabad and Kolkata, suggest a trend of companies diversifying to different locations beyond the top six cities.
