BFSI (Banking, Financial Services, and Insurance) and Flex Spaces emerged as key demand drivers for office spaces during the third quarter of 2024, stated a report by Vestian. These sectors, it added, account for 39 per cent of the pan-India absorption in Q3 2024, reporting a growth of 20 per cent from the previous quarter. Conversely, the share of the IT-ITeS sector declined from 38 per cent in Q2 2024 to 23 per cent in the current quarter. This demand shift may alter the demand-supply dynamics across the country.
Q3 2024, per the findings of the report, recorded the highest quarterly absorption rate in 2024, totalling 18.61 million square feet amid heightened geopolitical tensions in the Middle East. An increase of 17 per cent on-year and 9 per cent as against the last quarter in absorption could be attributed to India’s robust GDP growth compared to other major economies of the world which lured several large MNCs to lease new office spaces or expand.
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Following the same trend, new completions also increased by 3 per cent over the previous quarter, reaching 12.80 million sq ft in Q3 2024. However, construction activities have reduced by 4 per cent compared to the corresponding quarter of last year.
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Amid robust absorption and healthy supply, the Vestian report stated that pan-India vacancy was reduced by 90 bps over the previous quarter, reaching 14.8 per cent in Q3 2024. Despite a reduction in vacancies across the top cities, average rentals remained range-bound over the previous quarter.
Office space absorption across cities
Southern cities like Bengaluru, Chennai, and Hyderabad accounted for 61 per cent of the pan-India absorption in Q3 2024, reporting an increase from 55 per cent in Q2 2022. This growth in share, the report said, could be attributed to a significant increase in leasing activities across the major micro-markets of Bengaluru.
Bengaluru’s share in absorption rose from 25 per cent in Q2 2024 to 36 per cent in Q3 2024.
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