“We were working from home since the COVID 19 pandemic. Since the beginning of this year, we have been asked to go to office twice a week,” said Sandhya Shetty, an employee of a media company in east Bengaluru.

Signalling this increasing shift, many companies are working towards bringing employees back to office post the pandemic. Bengaluru, along with Hyderabad, accounted for over half of the leasing activity in the first three quarters of 2024, wherein Grade A office space demand went up to 46.7 million sq ft across the top six cities of India (Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune).

Highest ever leasing

According to Colliers, a multinational real estate services company, building on the momentum in the first half of the year, Q3 2024 saw space take-up to the tune of 17.3 million sq ft, a 31% year-over-year (YoY) growth. “Bengaluru registered its highest ever leasing in any quarter at 6.3 million sq ft, continuing its dominance in the office market,” the company said.“

“Office demand across different markets and sectors has been impressive in the last two to three years, aiding overall leasing reach new highs each passing year. Interestingly, 2024 saw consecutive quarters of high growth in demand and supply. Office space demand in Bengaluru, Hyderabad and Mumbai have reached close to or surpassed 2023 demand levels in the first three quarters of 2024,” said Arpit Mehrotra, Managing Director, Office Services, India, Colliers.

He added that occupier confidence is reflected in continued higher uptake of large-size deals of more than 1 lakh sq ft, accounting for 65% of total leasing in Q3 2024. Bengaluru saw 81% of its leasing through large-sized deals.

Tech sector drove consumption

The technology sector drove around one-fourth of the overall office space demand during the quarter, followed by Banking, Financial Services and Insurance (BFSI) occupiers, and Flex space operators (co-working spaces).

Bengaluru and Pune surpassed Mumbai in BFSI leasing.

“The strong demand does reflect the stricter enforcement of Return-to-Office (RTO) mandate amongst leading MNCs. With corporates increasingly adopting a mix of persuasive and coercive measures to bring employees physically back to offices, real estate requirements have been on the upswing in the last few quarters. The RTO trend has been gaining traction globally. India, in fact, leads most countries in this particular aspect. Across most occupier segments, including technology, corporate India has been consistently witnessing a RTO percentage of 75% or more,” said Vimal Nadar, Senior Director and Head of Research, Colliers India..

Amal Mishra, founder and CEO, UrbanVault,a Bengaluru-based managed office space provider, concurred, “The demand for office space has been steadily rising over the past few years, and this trend has continued into 2024. The majority of this demand is concentrated in Grade A office spaces, with managed flexible spaces experiencing significant growth. Many corporations are now opting for managed flexible office spaces due to the flexibility they offer and the lower capital expenditure required. This shift is driven by the need for adaptable work environments that can scale with business needs.”

GCCs in India

Adding that the demand will persist as numerous multinational corporations are establishing Global Capability Centers (GCCs) in India, while domestic companies are also upgrading their office spaces to accommodate growth and modernisation, he said almost all companies have now transitioned back to working from offices, with only a few continuing to operate under a hybrid model.

“This shift is driven by the need for better collaboration, easier communication, and fostering company culture, which are often more challenging in a fully remote environment. Unless there is another pandemic-like situation, we anticipate the demand for Grade A office spaces and flexible workspaces to continue on an upward trajectory,” he said.