Tech and Flex Space Surge Drives 11% Boost in India’s Office Space Demand in H2 2024

In the second half of 2024, India’s office space demand grew by 11% year-on-year, driven by technology and flexible workspace companies, with Bengaluru and Hyderabad leading in demand and supply. New office space supply increased by 7%, and vacancy rates remained stable at 17%. India accounted for 60% of new office supply in the Asia-Pacific region. The report forecasts continued growth in 2025, fueled by corporate expansion, return-to-office trends, and the growth of global capability centers (GCCs), which leased 1.4 million sqm, representing over 40% of total leasing activity.

Tech and Flex Space Surge Drives 11% Boost in India’s Office Space Demand in H2 2024

India’s office real estate market experienced robust growth in the latter half of 2024, with demand surging by 11% year-on-year, driven predominantly by technology firms and flexible workspace providers. According to a recent Colliers report, this uptrend underscores the resilience of the sector amid evolving workplace dynamics, as businesses prioritize hybrid models and scalable office solutions. Bengaluru and Hyderabad emerged as pivotal hubs, spearheading both demand and supply, while the overall market demonstrated stability with balanced vacancy rates and sustained supply growth.

Key Drivers: Tech Sector and Flexible Workspaces

The technology industry continued to dominate office space absorption, reflecting India’s strengthening position as a global IT and innovation hub. Concurrently, flexible workspace operators expanded their footprint to cater to shifting corporate needs, such as hybrid work policies and cost-effective solutions. This dual demand from traditional tech tenants and agile workspace providers created a synergistic boost, accounting for nearly half of total leasing activity. The trend highlights a broader shift toward adaptable office environments, blending dedicated corporate spaces with on-demand workspaces to accommodate fluctuating workforce requirements.

Bengaluru and Hyderabad Lead Regional Growth

Bengaluru solidified its status as India’s “Silicon Valley,” contributing significantly to leasing volumes, particularly in tech-centric corridors like Whitefield and Outer Ring Road. Hyderabad followed closely, leveraging its reputation for cost efficiency, robust infrastructure, and proactive state policies to attract multinational corporations and Global Capability Centers (GCCs). Together, these cities accounted for over 50% of pan-India office demand, with Hyderabad also leading in new supply additions. The cities’ thriving ecosystems—supported by skilled talent pools, superior connectivity, and developer confidence—positioned them as magnets for both domestic and international enterprises.

Supply-Demand Equilibrium and Vacancy Stability

New office completions rose by 7% year-on-year in H2 2024, aligning closely with the 11% demand surge. This equilibrium ensured vacancy rates remained steady at approximately 17%, indicating a balanced market despite heightened activity. Notably, India accounted for 60% of all new office supply additions across the Asia-Pacific region during this period, underscoring its prominence as a high-growth market. Developers focused on delivering Grade-A spaces with sustainability certifications and wellness amenities, aligning with tenant preferences for future-ready workplaces.

Rise of Global Capability Centers (GCCs)

GCCs played a pivotal role, leasing 1.4 million square meters of office space—over 40% of total transactions in H2 2024. These centers, established by multinationals to leverage India’s technical expertise and cost advantages, expanded their scope beyond back-office functions to include R&D, AI, and advanced engineering roles. Cities like Pune, Chennai, and Delhi-NCR also saw heightened GCC activity, diversifying geographic demand beyond traditional tech hubs. This trend reflects India’s growing strategic importance in global corporate ecosystems.

2025 Outlook: Sustained Momentum Ahead

Colliers anticipates continued growth in 2025, fueled by corporate expansion, the gradual return-to-office movement, and GCC diversification. With occupiers prioritizing high-quality, flexible spaces, developers are expected to innovate in design and technology integration. Additionally, tier-II cities such as Coimbatore and Ahmedabad may see increased traction as companies seek cost optimization and untapped talent pools. However, challenges like inflationary pressures and global economic uncertainties could moderate the pace of growth.

Conclusion

India’s office sector remains a bright spot in the Asia-Pacific region, characterized by dynamic demand drivers and adaptive supply strategies. The convergence of tech innovation, flexible workspace models, and GCC expansion has redefined workplace paradigms, positioning the country for sustained growth. As businesses recalibrate their real estate strategies to balance agility and scalability, India’s office market is poised to remain a critical engine of economic development in the coming years.