India has shown a strong growth in demand for large office spaces. Knight Frank India, in its latest report, has estimated a 54 percent YoY surge in the transactions of office spaces over 100,000 sq ft during H1 2024.
Large office space, according to the report, accounted for 45% of all commercial transactions across eight major cities in India for the period under concern. This growth indeed marks a strong growth trajectory for the commercial segment.
Focusing on the performance in specific cities, Bengaluru is leading the large office space leasing. The city reported 4.5 million sq ft transacted in H1 2024, marking a considerable 32 percent YoY increase from 3.4 million sq ft recorded in H1 2023. According to the report, large office spaces comprised 53 percent of Bengaluru’s total office transaction volumes during this period.
Large office space transactions took place in Hyderabad and Mumbai, while the second and third positions, respectively. Hyderabad witnessed 3.08 million sq ft being leased, followed by Mumbai with 2.66 million sq ft. This reflects very strong demand from regional markets for office space in larger formats.
Besides this growth in large office spaces, mid-segment office space leasing has also fared well. It consists of office space rent-outs between 50,000 and 100,000 sq ft. This category recorded a whopping 70 percent YoY growth in H1 2024, touching 7.28 million sq ft.
This includes 1.57 million sq ft of leased space each in Mumbai and NCR. Followed by 1.29 million sq ft of mid-sized office spaces transacted in Hyderabad. Overall, this would reflect the increasing demand for flexible office solutions as mid-segment leasing has gone up.
Deals below 50,000 sq ft, however, displayed growth along more modest lines. The transaction in this segment was about 11.7 million sq ft, up just 0.08 percent YoY. Leading the way were NCR, Pune, and Chennai, with transactions of 2.22 million sq ft, 1.78 million sq ft, and 1.6 million sq ft, respectively.
Shishir Baijal, chairman and managing director, of Knight Frank, said, “Bengaluru continues to be the best office market for large occupiers seeking to grow their operation in India. The increase in office transactions is primarily led by corporates setting up Global Capability Centres aimed at furthering the long-term operations of the market.”.
This may be seen as a positive indicator for growth. As there is an emerging demand for large and medium office spaces. At the same time, while setting up more GCCs and seeking flexible solutions to office requirements across various sectors, corporations are expanding their footprint in the country.
In essence, large office space deals have seen a sizeable increase and mid-segment leasing is strong. All these indicate a buoyant commercial real estate market in India. This trend is projected to persist for at least the next few months. As continuous growth of multinational companies by setting up new operation centers continues.
ANI