Commercial Real Estate Surge Continues: Office Leasing Likely to Record a Historic High of ~70 million Sq. Ft. in 2024

As we approach the end of 2024, India’s commercial real estate market is on the brink of a record-breaking year in office leasing activities. The country is set to achieve nearly 70 million square feet in office leases, marking the highest absorption rate ever recorded. As per CBRE Research Sept 2024, leasing is led by Bangalore, Delhi NCR, Hyderabad in that order account for country’s 58% office absorption. With Noida leading the surge in Delhi NCR Micro Markets, the region stands out as a prime destination for investors and expanding businesses alike.

Record-Breaking Absorption Levels

According to CBRE’s India Office Figures Q3 2024, total office leasing hit a record 53.8 million Sq. Ft. Year–to–Date across nine key cities, with the July-September quarter seeing unprecedented leasing numbers. Colliers also reported Delhi NCR achieving its highest quarterly supply addition in eight quarters of 6.5 million Sq. Ft, significantly contributing to this milestone in commercial leasing.

Projections for 2024 Breaking Pre-Pandemic Records

Both CBRE and Colliers estimate that by December, office absorption across major Indian cities should reach 70 million square feet. This would surpass the previous peak of 66.6 million square feet recorded in 2019, underscoring the sector's renewed vigor as companies expand their footprint post-pandemic.

Office Occupiers Favoring Small and Medium-Sized Spaces

A notable trend in the office leasing market is the high demand for small (<10k Sq Ft) to medium-sized(10k-50k Sq Ft) office spaces. According to CBRE, these spaces accounted for an impressive 84% of total office absorption in 2024, indicating a shift toward more agile and flexible office solutions. This preference reflects the needs of companies aiming for operational efficiency and adaptability as they navigate the evolving work landscape that mixes remote work with office working focusing on agile systems.

American Companies Driving Office Space Demand

The data from Collier Office Snapshot Quarter 3 2024, also highlights the leading role of American companies in India’s office leasing activities. American firms accounted for 40% of total absorption, reaffirming the country's status as a strategic hub for international businesses. CBRE also reports over 40% share for American companies in their Quarter 3 reports. This trend aligns with the increasing footprint of multinational corporations in Delhi NCR, especially in sectors such as BFSI, e-commerce, and technology.

The Rise of Domestic Firms as an Office Demand Driver

Further reviewing the Collier Office Snapshot Quarter 3 2024, data reveals that domestic firms have become the second-largest driver of office absorption in India, accounting for 34% of the total absorption. This underscores a robust and growing demand from Indian companies for office spaces, signaling a favorable environment for local businesses to expand and thrive. With this significant share, domestic firms are increasingly shaping the commercial real estate landscape, reflecting their growing influence in the market.

Industries That Are Key Demand Drivers in Delhi NCR 

Delhi NCR remains a focal point of commercial real estate growth, capturing 14% of the total leasing share in Q3 2024. The demand was driven primarily by BFSI, e-commerce, and technology sectors, which together comprised 58% of all office space absorption in the quarter. The region also saw significant uptake in flexible office spaces, with flex leasing making up 20% of the total, underscoring the continued appeal of versatile work environments.

Landmark Transactions and Noida’s Growth

Major leasing transactions, such as MetLife’s deal at Oxygen Business Park on the Noida Expressway, underscore Noida's attractiveness. Metlife leased 40,000Sqft of space at Oxygen Business park. Noida accounted for 40% of Delhi NCR’s total office absorption, reflecting its strategic appeal as a commercial hotspot within the region.

Positive Outlook for 2024 and Beyond

With supportive government policies, continuous investment from global corporations, and a growing preference for 'office-first' work models among large firms, Delhi NCR’s office market is on a strong upward trajectory. Noida is expected to play a vital role in this growth, attracting both investors and occupiers and establishing itself as a key business destination.

The Road Ahead

As 2024 draws to a close, India’s commercial real estate sector is poised to set new records. For investors and businesses seeking to establish a strong presence in the Delhi NCR region, this year’s unparalleled leasing activities signal a promising future. With a strategic location, robust infrastructure, and strong governmental support, Delhi NCR—and particularly Noida—represents a valuable opportunity for those looking to participate in this growth story.