In the first half of 2024, Knight Frank India reported significant activity in the office space market across eight major Indian cities, reflecting a strong demand for commercial real estate. A notable 55% of the total demand was for spaces measuring up to 100,000 square feet, showcasing the appeal of smaller and mid-sized office spaces. At the same time, larger office spaces—those over 100,000 square feet—accounted for 45% of the total demand, with transactions amounting to 15.69 million square feet.

The report highlights that mid-sized office spaces, ranging from 50,000 to 100,000 square feet, represented 21% of all transactions, with 7.28 million square feet leased. These spaces are particularly attractive to growing companies seeking scalability. Meanwhile, smaller office spaces below 50,000 square feet accounted for 34% of the demand, translating to 11.7 million square feet leased during the January-June 2024 period.

Bengaluru continues to stand out as the leading market for large office occupiers, driven by corporations establishing Global Capability Centres (GCCs). These GCCs serve as hubs for scaling long-term operations, and their growth has spurred the need for larger office spaces. According to Mr. Shishir Baijal, Chairman of Knight Frank India, the rise in demand is primarily fueled by global companies looking to strengthen their presence in India.

Flexible workspaces also remain crucial, especially for third-party IT services and startups. These companies are opting for cost-effective and adaptable office solutions that can evolve with their operational needs. This trend indicates a growing preference for flexibility in office leasing, which aligns with the global shift towards hybrid work models.

Another industry leader, Mr. Madhusudhan G, Chairman of Sumadhura Group, commented on the surge in leasing activity for large office spaces. He noted that the interest from both domestic and international clients is a positive sign for India’s growing commercial hubs. The commercial real estate sector in India has shown remarkable resilience, with demand bouncing back after the pandemic slowdown.

This resilience reflects broader market trends that are shaping India’s office leasing sector. With major tech hubs like Bengaluru driving demand, other cities are also witnessing a steady rise in leasing activity. The overall outlook for India’s office space market remains optimistic, with further growth anticipated in the second half of 2024.

For investors and businesses looking to explore commercial leasing opportunities, keeping an eye on emerging trends and city-specific demands is key. Cities like Hyderabad, Mumbai, and Pune are also seeing a rise in office space transactions, particularly in the IT and financial services sectors. The leasing market is expected to remain dynamic as global businesses continue to see India as a hub for expansion.

In addition to the strong demand for large and mid-sized office spaces, smaller, more flexible workspaces are becoming increasingly attractive to startups and remote teams. These smaller spaces offer the flexibility required for dynamic, fast-growing companies that need to scale up or down depending on market conditions.

The first half of 2024 clearly shows that India’s office space market is well-positioned for further expansion. With Bengaluru leading the charge in demand for large workspaces and other cities following suit, the overall sentiment in the sector remains positive. The establishment of GCCs is a strong indicator of confidence in India’s commercial real estate sector.

India’s office leasing sector is not only thriving but also evolving, with flexible workspace solutions playing an essential role in meeting the needs of modern businesses. The Knight Frank India report serves as a reminder that despite global economic challenges, the Indian commercial leasing market continues to demonstrate resilience and growth potential.

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