Bengaluru & Hyderabad Office Space Leasing Trends in FY-2024-25 Q1

Introduction

Over the past few years, the Indian office space market has grown significantly thanks in large part to the efforts of two southern cities: Hyderabad and Bengaluru. According to multiple reports and surveys, Bengaluru and Hyderabad have emerged as the prime destination for businesses of all scales and verticals. The demand for fully furnished, tech-enabled, and employee-centric workspaces has been skyrocketing and these Tier-1 cities have emerged as the major contributors in the rise of managed and flexible offices in India.

Moving further in this blog, we will highlight the key factors that are attracting high-growth startups, MSMEs, GCCs, and other large domestic enterprises to shift from traditional to managed and flexible workspaces.

Bengaluru and Hyderabad Established the Standard

Bengaluru and Hyderabad have become the nation's pre-eminent destinations for leasing flexible and managed workspaces. The demand for commercial office space for lease has expanded as a result of the significant investments made in these two locations by both domestic and foreign firms. In Bengaluru, for example, Grade A space occupied climbed by 4 million square feet during the first quarter of 2024, while in Hyderabad, it increased by 2.9 million square feet.

Bengaluru and Delhi-NCR, which have accounted for 59% of the country's office demand over the last four years, are typical market leaders in India's office sector. The rise in the need for high-end Commercial Office Space in Bangalore and Hyderabad can be ascribed to multiple factors, including the expansion of the technology and healthcare sectors, the availability of a proficient labor pool, and the advancement of urban infrastructure.

Bengaluru: A Centre of Excellence for Office Spaces

Bengaluru's strong and diverse corporate ecosystem has helped it to maintain a prominent place in the office space market. Many different types of organizations, including small and medium-sized enterprises, multinational corporations, and other large domestic enterprises, have found success in leasing commercial office space in Bangalore. Several well-known areas, like MG Road, HSR Layout, Jayanagar, Koramangala, and Indiranagar have become a prominent hub for businesses to commence or expand their operations with ease in Bangalore.

The considerable demand for Grade A workplaces that characterize the city's office space market is largely driven by the IT and ITeS sectors. According to a JLL analysis, the growing popularity of North Bengaluru is further evidenced by the increasing number of office projects that are set to be completed in the period spanning from 2022 to 2026.The city's excellent business landscape, highly skilled workforce, and strong infrastructure will propel this expansion.

Hyderabad: A Notable Market for Commercial Offices

Lately, Hyderabad has cemented its position as the nation's leading commercial office market. For tenants, such as Global Capability Centres, price arbitrage is significant in relation to other markets within the city. The first quarter of 2024 saw the completion of significant transactions. The Technology, BFSI, Engineering & Manufacturing, and Healthcare sectors remained at the forefront of the flex space growth in India.

Additional Important Office Markets

Bengaluru and Hyderabad saw the highest levels of rental activity for premium office space during the first quarter of 2024. But there was also notable growth in other large office areas. Delhi-NCR absorbed 2.5 million square feet, good for third position in the classification. On the other hand, during the first quarter of 2024, leasing activity in Mumbai saw a notable uptick, rising by an astounding 29% year over year.

There are a number of reasons for Mumbai's high demand for upscale office space, including the city's sophisticated infrastructure, thriving corporate community, and large workforce. Office space in Mumbai transactions reached 2.8 million square feet (msf) in Q1 2024, reflecting a significant year-on-year (YoY) increase of 29%. The strong demand for office spaces was attributed to the country's economic stability, which spurred businesses operating in India to expand their operations

Conclusion

Bengaluru and Hyderabad are the two Indian cities with the highest demand for upscale office space. The two cities are appealing to businesses looking for commercial office space because of their developing business ecosystems, highly skilled labor markets, and recent infrastructure improvements. Businesses may discover the ideal workplace that fits their needs and budgets thanks to the wide range of lease options available in Bengaluru and Hyderabad.

It is anticipated that in the upcoming years, the demand for premium office spaces will continue to surge as more businesses will show high interest in hybrid and hub-and-spoke models. So, elevate your operations with Smartworks managed and flexible workspace solutions in 14 cities and 40+ locations. Being one of the leading platforms for managed and flex spaces in India, Smartworks caters to the ever-evolving demands of business of all scales with ergonomic furniture, bespoke designs, aspirational amenities, cutting-edge tech solutions, standardized experience, and a seamless onboarding process.