Bengaluru has firmly established itself as a powerhouse in India's office rental market, consistently outpacing its peers with remarkable performance. According to the IIMB-CRE Matrix Commercial Property Rental Index (CPRI), the city has achieved positive rental growth in 44 out of 50 quarters, the highest among Tier-1 cities.

Consistent Growth in Rentals

With a 12-year compound annual growth rate (CAGR) of 5.3%, Bengaluru ranks as the third-highest performer among Tier-1 cities in India. The five-year CAGR stands at 3%, while the 10-year CAGR is an impressive 5.2%, underlining the city’s sustained growth in office rentals. A standout period was Q3 CY’13, which witnessed a record 4% quarterly growth fueled by robust leasing activity.

Top-Performing Areas

Bengaluru’s key commercial hubs—Whitefield, South Bengaluru, and the Outer Ring Road (ORR)—are driving its dominance. Whitefield leads the charge with a 12-year CAGR of 6.1%, making it the city’s most sought-after commercial hub. Meanwhile, South Bengaluru and the Central Business District (CBD) continue to attract a diverse range of businesses, cementing their status as rental growth drivers.
ClayWorks is strategically expanding in these prime locations, with five properties in South Bengaluru, three in the CBD, and an upcoming property in Whitefield, reflecting the city’s evolving office space needs.

The Thriving Office Market: Key Highlights

Strong Leasing Activity

For four consecutive quarters, Bengaluru’s office market has exceeded 20 million square feet (MSF) in gross leasing volumes (GLV). Fresh leases accounted for 75% of the demand, with significant increases both quarterly and annually. Large transactions in top cities fueled this remarkable performance.

Surge in GCC Transactions

Global Capability Centers (GCCs) made up 30% of total leasing volumes, reaching levels unseen since 2019. This record-breaking activity reflects Bengaluru’s growing appeal to global multinationals.

Stable Domestic Firm Participation

Indian companies have also maintained significant leasing activity, supported by a robust domestic economic outlook.

Year-to-Date Leasing Volumes

As of September 2024, leasing volumes reached nearly 67 MSF, marking a 41% increase compared to the same period in 2023. Projections indicate that 2024 will break records by surpassing the 80 MSF mark for the first time.

Fresh Leasing Growth

Fresh leasing in Q3 2024 stood at 18.7 MSF, a 28% increase from the previous quarter and an 81% growth year-on-year. Bengaluru led the charge, contributing 31% of fresh leases, followed by Hyderabad and Mumbai (18% each), and Delhi NCR (12%).

Rising Rentals

High demand coupled with limited new supply has led to increased office rents across several cities during Q3 2024.

Net Absorption: A Testament to Growth

Net absorption, which measures the actual occupied office space, surged to 12.6 MSF in Q3—a 32% quarterly increase and a 55% jump compared to the same period last year. Year-to-date, net absorption has reached 34 MSF, reflecting 49% annual growth. Bengaluru led with a 32% share, followed by Mumbai (21%) and Delhi NCR (14%).

The Road Ahead

The strong momentum in Bengaluru’s office market shows no signs of slowing. Large deals are being finalized at a rapid pace, and fresh demand continues to rise. Projections for 2024 indicate net absorption will exceed 40 MSF, nearing pre-COVID highs.

Bengaluru’s office spaces are not just about scale but also innovation, sustainability, and functionality. With marquee areas like Whitefield and ORR setting benchmarks in infrastructure and connectivity, the city remains the preferred destination for businesses looking to expand in India.

Bengaluru’s thriving office market, driven by consistent rental growth, robust leasing activity, and a strong domestic and global occupier base, is poised to set new records. As businesses flock to the city for its unparalleled infrastructure and opportunities, Bengaluru continues to cement its position as India’s premier office space hub.