The India Office Report – Q3 CY’24 by CRE Matrix and CREDAI highlights a strong resurgence in the commercial real estate sector, with record-breaking demand, tightening vacancies, and rising rents across key markets. Driven by Global Capability Centers (GCCs), IT/ITeS firms, and flexible workspace operators, the office market continues to outperform expectations in 2024.
Record-Breaking Demand Defines 2024
India’s office market is on track to deliver its strongest year yet. With 58 msf of demand recorded in the first three quarters, the sector has already surpassed the total annual demand seen in CY 2018.
In Q3 CY’24 alone:
- Demand stood at 18.4 msf
- Supply was comparatively lower at 11.7 msf
- Resulting in a 1.6x demand-to-supply ratio, the highest ever recorded
This sustained demand momentum reflects strong occupier confidence, particularly from GCCs and coworking operators.
Vacancy Drops to 14-Quarter Low
Pan-India vacancy levels have declined to 16.1%, marking the lowest point in the last 14 quarters. This tightening is being driven by strong leasing activity across key markets, particularly Bengaluru (28% of total demand), MMR (19%), and Hyderabad (17%). As a result, the market is increasingly tilting in favor of landlords, especially in high-demand micro-markets where limited availability is pushing occupiers to act faster and secure space at rising rents.
Rents Cross ₹100 psf Milestone
For the first time, market rents have crossed the ₹100 per sq. ft. milestone, with the pan-India average reaching ₹110. This upward trajectory is being led by key markets such as Bengaluru and NCR, where strong demand and limited availability are pushing rents higher. The widening gap between market rent and passing rent highlights growing pricing power for landlords, increasing leasing costs for new occupiers, and a steady appreciation in the value of existing lease portfolios.
On the demand side, leasing activity continues to be driven by core sectors, with IT/ITeS accounting for 22%, co-working at 24%, and BFSI contributing 14%. Notably, coworking has reached an all-time high share, underscoring the rising preference for flexible workspace solutions. This shift reflects how occupiers are prioritizing agility and scalability in their real estate strategies.
City-wise Highlights
Bengaluru continues to lead as the demand powerhouse, recording 4.9 msf of leasing activity in Q3 CY’24, while maintaining a low vacancy of 9.7%. Key micro-markets such as Outer Ring Road and Whitefield remain highly active, driven by large deals and continued expansion from global firms, reinforcing the city’s position as the top office destination.
In the MMR (Mumbai Metropolitan Region), strong absorption and rising rents define market dynamics. The city recorded 3.1 msf of demand with a 15% vacancy rate, supported by a healthy 2.2x demand-to-supply ratio. Premium transactions and increasing rental benchmarks indicate intensifying competition among occupiers for quality office space.
Delhi-NCR is witnessing tight supply conditions, with 3.4 msf of demand against just 0.9 msf of new supply, resulting in a sharp 3.7x demand-to-supply ratio. This imbalance is accelerating market tightening and creating upward pressure on rents across prime office corridors.
Hyderabad saw a strong rebound in demand, which grew 47% quarter-on-quarter, although vacancy remains relatively high at 24.9%. Despite this, the city continues to attract large IT and global occupiers, highlighting its long-term appeal as a cost-effective and scalable office market.
Meanwhile, Pune and Chennai are emerging as stable growth markets. Pune reported a vacancy of 12.6%, while Chennai stood at 12.5%, with both cities demonstrating consistent demand, balanced supply pipelines, and steady, moderate rental growth.
Key Trends Shaping the Market
- Landlord-favourable conditions emerging across major cities
- Flexible workspaces gaining scale as occupiers seek agility
- Rising rents driven by demand-supply imbalance
- Large deal sizes increasing, especially above 1 lakh sq. ft.
Q3 CY’24 reinforces a clear narrative: India’s office market is in a high-growth phase, backed by structural demand drivers and evolving workplace strategies. With vacancy tightening and rents rising, the market is steadily transitioning into a landlord-driven cycle.
As demand continues to outpace supply, stakeholders who leverage data-driven insights and proactive lease management will be best positioned to capitalize on this momentum.
Elevate your decisions in real estate as a developer or broker with CRE Matrix‘s data-driven insights. Book a demo now!
