India Office Leasing Surges as GCCs and Flex Spaces Dominate

Office Market Reaches New Heights

India's office property market is witnessing an impressive surge in net absorption, fueled primarily by global capability centres (GCCs) and flexible spaces. This remarkable growth is driven by the continued expansion of global and domestic corporations, further cementing India's position as a pivotal business hub.

From July to September 2024, gross leasing volumes surged by 24%, reaching 19.89 million sq. ft., making it the second-highest quarterly figure on record after the October-December 2023 period.

Bengaluru Leads the Way in Leasing Activity

The momentum of office space leasing continues to break records, with gross leasing volumes standing at an unprecedented 53.43 million sq. ft. for the first nine months of 2024. Analysts anticipate that gross leasing activity will reach an all-time high of 70 million sq. ft. by the end of the year, surpassing previous benchmarks. GCCs were a dominant force, accounting for 36.2% of all leasing activity, while international companies commanded a significant 56.8% share of the market.

Bengaluru led the leasing activity with a 24.6% share, followed by Delhi-NCR at 23.1%. Mumbai and Hyderabad were also key players, together contributing 50% of India’s total leasing activity for the January-September period.

The introduction of Karnataka’s new GCC policy, along with potential incentives from other states, is expected to further accelerate growth and attract more GCCs to the market.

The Flex Space Revolution

Flexible spaces have emerged as a powerful force in India's office market, surpassing traditional occupiers such as tech and BFSI for the first time. Flex operators accounted for 22% of leasing activity in Q3 2024, with a record-breaking 4.38 million sq. ft. leased during the July-September period alone. The flex segment is now poised to break its previous annual record of 10.4 million sq. ft., set in 2019.

Flexible workspaces offer occupiers the ability to reconfigure space as needed, making them highly attractive in today's dynamic business environment. The post-Covid period has seen both the highest gross leasing volumes, signaling a strong recovery and renewed confidence in India's office market.

Post-Pandemic Resilience and Future Outlook

The ongoing leasing boom underscores India's role as a crucial hub for global operations, particularly in sectors such as technology, manufacturing, and engineering. With demand from global and domestic firms continuing to rise, analysts project sustained growth in the office property market.

As India maintains its position as a top real estate destination for international corporations, the office leasing market is expected to see continued acceleration in the years to come.