Office sector on track to surpass 50 million sq ft for 3rd consecutive year

Office sector surges: The office sector of the country is on track to surpass the 50 million square feet (sq ft) mark for the third consecutive year in 2024. The market is poised for robust leasing activity driven by domestic enterprises and a resurgence in Global Capability Centers (GCCs), according to a report by Colliers and FICCI.

Leasing forecast: Dreamy vs practical

The report forecasts a range of scenarios for office leasing in 2024. In an optimistic outlook, leasing could reach 55-60 million sq ft, while a more cautious scenario projects leasing at 45-50 million sq ft. However, the report suggests a realistic scenario balancing demand and supply dynamics, potentially accommodating rental upside across major office markets.

Arpit Mehrotra, MD and Head of Office Services, Colliers India, highlights the important role of domestic enterprises, which are expected to contribute over half of the anticipated office space uptake in 2024. Simultaneously, GCCs are gaining ground, projected to account for more than 40 per cent of the total office demand.

Tenant trends transform

The shifting tenant composition is notable, with sectors like Banking, Financial Services, and Insurance (BFSI) and Engineering & Manufacturing emerging as strong demand drivers. Flexible workspaces are also anticipated to play a major role, with projections indicating they could comprise 15 per cent to 20 per cent of Grade A office demand in 2024.

Vimal Nadar, Senior Director & Head of Research, Colliers India, highlights the resilience demonstrated by the overall office ecosystem, with large-sized deals projected to account for 50 per cent  to 55 per cent of leasing activity in 2024. Nadar also points out the positive performance of listed office Real Estate Investment Trusts (REITs), indicating optimism amongst key stakeholders.

Peripheral growth spurt

Peripheral Business Districts (PBDs) are expected to witness robust growth, with about 30 per cent  to 35 per cent of Grade A office demand likely to come from these areas in 2024. The completion of key infrastructure projects is anticipated to drive this growth, offering superior quality office space options across diverse demand segments.