Bengaluru is witnessing a remarkable surge in office space absorption, propelled primarily by the artificial intelligence (AI) and robotics sectors. According to the latest quarterly report by Vestian, titled The Connect Q2 2024, these sectors accounted for a significant 21% of total office space absorbed in the city during the second quarter of 2024. This trend reflects the rapid global advancements in AI technology and the robust local ecosystem that supports innovation.
Overall, the IT-ITeS sector, which encompasses AI and robotics, dominated the landscape, representing 69% of Bengaluru’s total office space absorption in the same period. The city has emerged as a frontrunner in India’s office space market, contributing to 25% of the national absorption share in Q2 2024, with Hyderabad and Mumbai following closely at 20% each. Notably, Pune experienced an astonishing quarterly growth of 307%, while Chennai faced a stark 48% decline, highlighting the varied dynamics across different regions. The National Capital Region (NCR) also reported a significant quarterly decrease of 37%. Except for Chennai and NCR, all major cities experienced increases in office space absorption compared to both the previous quarter and the same period last year. In Q2 2024, the IT-ITeS sector not only led the absorption figures with a 38% share but was also followed by the BFSI (Banking, Financial Services, and Insurance) sector at 12% and Consulting Services at 10%. The demand for flexible workspaces was also notable, accounting for 8% of total absorption.
The first half of 2024 recorded over 30 million square feet of office space absorbed, reflecting an 18% increase from the same period in 2023. With such strong demand for grade-A office spaces across India’s top seven cities, the total absorption for 2024 is anticipated to exceed 60 million square feet, maintaining the momentum established in 2023. In Q2 2024 alone, office space absorption reached 17.04 million square feet—a remarkable 27% increase from the previous quarter and a 23% rise compared to the same quarter last year. This growth is attributed to an improved global macroeconomic environment and India’s resilient economic performance amid global challenges. New office space completions also rose, increasing by 17% in the first half of 2024 compared to the same period last year, totalling 23.2 million square feet. Q2 2024 alone saw a 15% quarterly increase and a 10% yearly rise in new completions.
While Bengaluru and Pune experienced declines in construction activities, cities like Mumbai reported significant growth, with 3.3 million square feet of new completions in Q2 2024—a staggering 230% quarterly rise. Bengaluru led the charge in new completions with a 28% share, closely trailed by Mumbai at 27%. The southern cities, including Bengaluru, Chennai, and Hyderabad, accounted for 57% of total new completions in Q2 2024, albeit down from 63% in the previous quarter. As the city continues to evolve, the intersection of technology and real estate is set to redefine Bengaluru’s skyline, creating spaces that not only serve businesses but also foster innovation and sustainability, embodying the spirit of a thriving metropolis.
