New Delhi, March 25 : India's office leasing market broke previous records in 2024 at 81.7 million square feet (MSF), 19 per cent increase from 2023 and its highest-ever leasing in a calendar year, a report showed on Tuesday.

The IT/ITES sector constituted the largest share, accounting for 42 per cent of total leasing demand, up from 28 per cent in 2023, according to the report by real estate data analysis platform CRE Matrix and CREDAI.

'It was the overall business sentiment and a strong demand for flexible workspace models which powered India's office leasing to record levels,' the report mentioned.

Bengaluru, Hyderabad, and Mumbai led the market, collectively accounting for 62 per cent of the demand and recording a 20 per cent year-on-year growth.

Except Bengaluru and Hyderabad, each of the top six cities witnessed their all-time high of office leasing demand last year.

According to the report, the office leasing market also saw most of the demand for large transactions, as transactions above 100,000 sq ft contributed 41 per cent of total demand, with a 13 per cent YoY increase, particularly in Bengaluru and Pune.

Pan-India office rental rates reached Rs 106 per square foot, reflecting a 13 per cent annual growth, primarily driven by a high demand-supply ratio, with Hyderabad, Pune, and Mumbai playing key roles in this surge.

India crossed the milestone of 900 msf of Grade A office stock in 2024. Bengaluru and Hyderabad, the largest supply contributors, added 55 per cent to this supply as compared to 51 per cent in 2023.

The average demand-to-supply ratio of 1.5 times in 2024 led to a drop in vacancy rates across Delhi-NCR, Mumbai Metropolitan Region (MMR), and Chennai, reducing the pan-India vacancy rate to 15.7 per cent last year, as compared to 17.7 per cent in 2023.

The co-working/flex segment contributed 13 msf to office leasing demand in 2024, as compared to an average of 10 over last 3 years, an increase of 30 per cent, said the report.

Demand from co-working operators grew 25 per cent, with Delhi NCR doubling and Bengaluru rising by 1.4 times, it added.

/IANS