Pan India leasing volumes surged in Q3, recording the second highest quarterly figure ever. The office market continued to strengthen in the third quarter on the back of faster closures of large deals by global multinationals across major cities, with global capability centres (GCCs) being a major focus area, and healthy demand even from domestic enterprises. Fresh demand remained the dominant driver of space take-up, highlighting the strong occupier confidence levels that is propelling the market to newer highs. Global occupiers are moving ahead decisively with their near-to-medium term expansion plans, reflected in the robust market sentiments. All major cities including Bengaluru, Mumbai, Delhi NCR and Hyderabad recorded elevated levels of fresh space take-up across sectors such as IT-BPM, BFSI, engineering & manufacturing and flex operators. The active deal pipeline remains healthy and expected deal closures in upcoming quarters are likely to keep near-term momentum intact. With YTD-24 GLV already nearly 67 msf as of Q3, we strongly believe that the full year will breach 80 msf, thereby rendering 2024 a historic high in terms of overall leasing volume.
While pan India supply increased in Q3 compared to the last quarter, largely driven by completions in Bengaluru and Hyderabad, demand seems to be outstripping supply, which points to the need for expediting completions across major cities as occupier space enquiries for quality Grade A supply grow. However, Pan India supply pipeline remains healthy and speculative supply is likely to increase though developers need to focus on both project timelines and quality to benefit from the ongoing demand spike. Headline vacancies fell across major cities and rentals increased on an annual basis, with net space take-up recording strong momentum.
Key Highlights
Q3 2024
- 24.8 MSF gross leasing volume (GLV) in top 8 cities in Q3 2024; a 66% jump on an annual basis and a 14% expansion over the previous quarter.
- Bengaluru led pan-India GLV in Q3, accounting for 28% share, followed by Mumbai, Delhi NCR and Hyderabad with shares of 21%, 15% and 14%, respectively.
- IT-BPM accounted for highest share (~32%) in quarterly leasing, followed by flexible workspace and BFSI with 15% and 14% shares, respectively. Engineering & manufacturing’s share was relatively lower at 13% of GLV in the quarter.
- 10.0 MSF of new completions were recorded in Q3 2024 with Bengaluru and Hyderabad accounting for 50% and 24%, respectively.
- Net absorption in Q3 2024 stood at 12.6 MSF, a 55% surge on an annual basis and a 32% growth in comparison to the previous quarter.
