Grade A Office Spaces Demand Growing at a Brisk pace, 164.3 Mn Sq Ft Added Since 2021

June 14, 2024: India’s office market is undergoing a profound transformation, reflecting the country’s robust economic growth, demographic advantages, and rising aspirations. This growth is not only increasing the real estate sector’s share in India’s GDP but also meeting the demand for Grade A office spaces across metro and tier 2 and 3 cities. According to a recent report by JLL, an impressive 164.3 million square feet of Grade A office space has been added between 2021 and the first quarter of 2024. This surge in office space is a testament to India’s rapid urban development and the growing preference for modern, sustainable office environments.

Pan India Overview: A Surge in Office Space

The rapid expansion of office space across India can be attributed to several factors. From an office stock of 278 million square feet in 2008 to over 900 million square feet today, the top eight cities in India have driven much of this growth. The young population, increasing economic activities, and the rise of new urban centers are significant contributors. According to reports, an additional 1.7 billion square feet of office space will be required in the next decade, with a total demand of around 2.7 billion square feet by 2034.

Leasing volumes have remained strong across India, with pan-India leasing crossing the 20 million square feet mark in Q1 2024 for the third time since the pandemic. This level of activity indicates a high plane of growth in India’s office real estate market. Cities like Bengaluru, Mumbai, Delhi NCR, and Hyderabad have reported robust lease transactions, with significant deals closing and developers expediting project completions to meet strong occupier demand.

Delhi NCR: A Key Growth Driver

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“Grade A office spaces have become a hallmark of India’s commercial real estate sector. These spaces are characterized by their high-quality features, including state-of-the-art facilities, strategic locations, and sustainable design. As India continues to grow economically, the office real estate market will play a crucial role in supporting this growth and contributing to the country’s overall development,” says Deepak Kapoor, Director, Gulshan Group.

“As one of India’s prime office markets, Delhi NCR has seen substantial growth in office space, driven by the region’s strategic location, excellent connectivity, and a thriving business environment. The demand for Grade A office spaces in Delhi NCR has been particularly strong. These premium office spaces are known for their prime locations, modern amenities, and superior infrastructure, making them the preferred choice for businesses seeking a conducive work environment,” says Salil Kumar, Director (Sales & Marketing), CRC Group.

The region reported robust supply additions in Q1 2024, contributing significantly to the overall growth in India’s office market.

“Delhi NCR has witnessed a remarkable surge in its attractiveness to investors, both domestic and international. A significant portion of this foreign investment is strategically directed towards the commercial segment, particularly Grade A office spaces. This targeted investment focus is a clear recognition of the evolving needs of businesses today. Grade A office spaces are designed and equipped to cater to these needs, offering modern infrastructure, efficient layouts, and advanced amenities. This translates into a dynamic work environment that fosters collaboration, innovation, and, ultimately, business success. As Delhi NCR continues to establish itself as a major commercial hub, Grade A office spaces will undoubtedly remain the preferred choice for companies seeking to establish a strong presence and propel their growth trajectory in this vibrant market,” says Harpreet Singh Hora, Group Director, Reach Group.

The Noida-Greater Noida Expressway in Delhi-NCR has become one of the top choices for office spaces. The rapid construction of the Noida International Airport and upcoming major projects has brought significant attention to the area, creating vast opportunities. “At Group 108, we aim to leverage this potential by developing an IT/ITeS project featuring Grade A office spaces on the Noida–Greater Noida Expressway,” says Dr. Amish Bhutani, Managing Director, Group 108.

The growth of Grade A office spaces is also driven by the increasing participation of foreign investors. Over the last five years, global investors have infused an average of $4 billion annually into India’s office segment, with 90% of this investment coming in 2023 alone. This trend highlights the confidence international investors have in India’s growth story and the inherent strength of the office segment.

Future Prospects and Economic Impact

The future prospects for India’s office market are highly promising. The India Office Real Estate Market is projected to grow from USD 33.41 billion in 2024 to USD 117.04 billion by 2029, at a CAGR of 28.5%. This growth is expected to generate significant economic benefits, with potential revenue from India’s office real estate estimated to reach USD 125 billion by 2034.

The commercial real estate industry in India is constantly evolving, and the demand for Grade A office spaces is a key driver of this transformation. These spaces are reshaping cityscapes and redefining corporate environments, providing businesses with the infrastructure they need to thrive.

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The massive transformation in India’s office market, highlighted by the addition of 164.3 million square feet of Grade A office space since 2021, reflects the country’s dynamic economic landscape and rising aspirations. With regions like Delhi NCR leading the way, the future of India’s office real estate market looks bright, promising substantial growth and investment opportunities in the years to come.