Record office demand seen in 2024; gross leasing to cross 80 mn sq ft in top 8 cities: C&W

Gross leasing of office space across the top eight cities is likely to cross 80 million square feet this calendar year, beating a record 74.5 million square feet during 2023, according to Cushman & Wakefield.

Real estate consultant Cushman & Wakefield on Wednesday released its report on the office market for the third quarter of this calendar year.

The gross leasing of office space rose 66 per cent to 24.8 million square feet across the top eight cities in Q3 2024, marking the second highest quarterly leasing volume in the sector's history.

During January-September, the gross leasing has reached 66.7 million square feet.

Office leasing stood at 49.1 million square feet in 2018; 67.7 million square feet in 2019; 46.6 million square feet in 2020; 50.4 million square feet in 2021; 72 million square feet in 2022; and 74.5 million square feet in 2023.

"Strong market fundamentals have sustained extraordinary leasing momentum in the Indian office market, as evidenced by the remarkably low vacancy rates across the top eight markets," Anshul Jain, Chief Executive, India, Southeast Asia and APAC Tenant Representation, Cushman & Wakefield said.

This growth spurred by Global Capability Centers (GCCs) cements India's status as a key outsourcing hub for innovation and growth, he said, adding that the segment remains highly buoyant with leasing set to breach 80 million square feet by this year by a wide margin.

Veera Babu, Managing Director, Tenant Representation, Cushman & Wakefield, said, "with gross leasing volume already exceeding 66 million square feet, we have reached nearly 90 per cent of the total gross leasing volume recorded in 2023."

Given that the average quarterly gross leasing has been around 20 million square feet in recent years, he said it is highly probable that the full-year total would cross 80 million square feet, setting a new record.

"The decline in vacancy rates clearly indicates strong demand for office spaces, particularly in light of the limited supply currently in the market. While we expect an increase in supply in the near future, the prevailing market dynamics suggest that demand will likely continue to outstrip availability, potentially driving rental prices higher in key markets," said Veera Babu.

Cushman & Wakefield data highlighted a historic low in vacancy rates, dropping to 17.1 per cent - the lowest recorded in 14 quarters.

This sharp decline of 60 basis points (bps) quarter-over-quarter indicates a thriving demand for office spaces, it added.

The eight cities tracked by Cushman & Wakefield are -- Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Pune and Ahmedabad.