Class A Office Rental Market Sees Remarkable Growth of 31% in Q3 2024 Driven by Demand for Technology and BFSI

Driven by huge demand from technology companies and BFSIs, the country’s Class A office rental market saw a significant increase in absorption in September. The latest data from Colliers India shows that Class A office space absorption increased by 31% year-on-year in the last three months, reaching 17.3 million square feet, up from 13.2 million square feet (msf) in the same quarter of the year previous one.

In fact, leasing activity in 2024 was solid. From January to September 2024, leading companies leased nearly 47 msf of Class A office space, up 23% from the 38 msf leased in the first nine months of 2023.

Among the sectors renting class A space, technology remains at the forefront – 4.5 msf of office space was leased in Q3 2024 – 25% more than in the same quarter last year – followed by companies from the BFSI group, which leased a total of 3 .8 msf of Class A office space, an increase of 138% year over year. Flexible space operators leased 3.4 msf, ranking third. Notably, healthcare and pharmaceutical companies grew their leasing business the most, growing 341% year-over-year to 1.5 MSF in Q3.

Bengaluru topped the list of markets with 6.3 msf of Class A office space leased in the last quarter, up 85% year-over-year. This was followed by Hyderabad (2.9 msf) and Delhi-NCR (2.4 msf), while Pune recorded the highest growth at 160% year-on-year.

“Interestingly, Bengaluru and Pune overtook Mumbai in terms of BFSI leasing, accounting for 39% and 25% share of total BFSI leasing in the quarter, respectively. Selected micro markets such as SBD 1 in Bengaluru, Golf Course Road in Delhi-NCR, CBD in Pune and SBD in Hyderabad accounted for approximately 54% of flex space leasing in Q3 2024.” – note Colliers analysts.

Meanwhile, new deliveries increased 33% year-on-year in Q3, reaching 14.4 MSF.

“Demand for offices across markets and sectors has been impressive over the last 2-3 years, driving overall occupancy levels to new levels year after year. Interestingly, 2024 will see further quarters of high growth in both demand and supply. Demand for office space in Bengaluru, Hyderabad and Mumbai in the first three quarters of 2024 has met or exceeded 2023 levels. Tenant confidence is reflected in the continued acquisition of large transactions of over 100,000 square feet, which accounted for 65% of total leasing in Q3 2024, Bengaluru recorded 81% of its leasing through large transactions, while Pune was close behind with 71%, driven by the technology and BFSI sectors,” says Arpit Mehrotra, Managing Director, Office Services, India, Colliers .