Domestic firms turn dominant lessors of office space since 2022

Domestic companies account for nearly 47% of overall office leasing activity in the country from 2022 to the first half (H1) of 2024, highlighting a shift from the traditional dominance of global corporations, particularly American firms.

According to a report put out by realty  consulting firm CBRE South Asia Private Ltd, on Thursday,  out of the total investments made by corporates in office space in 2023 and 2024 in India, 74% have been by domestic firms accounting for almost $571 million.

Delhi-NCR led the way, followed by Bengaluru and Mumbai, in domestic space take-up between 2018 and H1 2024.

The years 2022-2023 marked this shift as domestic firms witnessed a significant 60% increase in office space absorption compared to the two pre-pandemic years of 2018-2019. Before 2022, domestic companies consistently accounted for around one-third share of the overall leasing.

Leasing by domestic firms in India in H1 2024 has reached 14 million square feet (msf). In the full year of 2022 and 2023, the absorption had reached 58 msf.

In recent years, the office leasing landscape in India has been predominantly driven by flexible space operators, banking, financial services, and insurance (BFSI), and technology firms. These sectors have together accounted for two-thirds of all domestic office leasing activity. This trend is expected to persist.

Bengaluru has led the domestic technology leasing from 2018 to April-June (Q2) 2024. Together with Pune and Hyderabad, these cities accounted for almost 54% share in overall domestic technology leasing.

Bengaluru and Hyderabad also saw increased occupancy by e-commerce and life sciences firms, respectively.

Domestic firms are expected to lease 60-65 msf office space between 2024 and 2025, as per the report. India’s top nine cities are expected to witness about 185 msf premium office space addition by 2026.

Ram Chandnani, Managing Director, Advisory and Transaction Services, CBRE India, said, “India is on track to significantly expand its office space across top cities over the next three years. This growth is driving broader industry expansion and increasing demand for real estate leasing.”

In H1 2024, domestic players accounted for 43% office leasing in India. The remainder of the regions showing maximum leasing are the Americas at 33%, Europe, Middle East, and Africa at 19%, and Asia–Pacific at 4%. These numbers have been similar since 2022.