The Bengaluru office market saw a 28 per cent year-on-year decrease in gross leasing activity, with new supply dropping by 25 per cent y-o-y in the July–September period, according to Vestian.
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In contrast, office space absorption across the top seven cities, including Bengaluru, Hyderabad, Chennai, Mumbai, Pune, Delhi-NCR, and Kolkata, rose by 21 per cent y-o-y to reach 15.9 million sq ft, while new supply grew by 26 per cent to 13.4 million square feet during the third quarter of this calendar year.
“In Q3 2023, the Indian office sector witnessed heightened real estate activities as absorption reached the highest level since pandemic and new completions increased to a five-quarter high,” said Shrinivas Rao, CEO, Vestian.
The IT-ITeS sector dominated leasing with a 25 per cent share, and the BFSI sector accounted for 20 per cent of the total absorption. Moreover, the manufacturing, engineering and flexible space sectors accounted for 17 per cent and 16 per cent share, respectively, in Q3 2023.
The sector also reported healthy vacancy levels with an appreciation in average rentals. Bengaluru, the largest office market with a major presence of IT companies, recorded a 28 per cent y-o-y decline to 3.6 million sq ft in leasing transactions. The new supply also declined 25 per cent y-o-y to 2.7 million square feet.
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Similarly, leasing office space in Delhi-NCR also fell 14 per cent y-o-y to 3 million sq ft. The new office space supply plunged 82 per cent to 0.5 million sq ft.
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Meanwhile, the leasing transactions of office space in Chennai rose 82 per cent to 2 million sq ft and new supply was up 71 per cent to 1.2 million sq ft. In Hyderabad, the leasing of office space jumped 270 per cent to 3.7 million sq ft. New supply soared 175 per cent to 5.5 million sq ft.
Leasing office space in Mumbai rose 21 per cent to 2.3 million sq ft. The new supply jumped 125 per cent to 0.9 million sq ft.
Pune witnessed an 83 per cent increase in office leasing to 1.1 million sq ft. New supply rose 73 per cent to 1.9 million sq ft. The Kolkata office market saw 0.2 million sq ft of leasing transactions and 0.7 million sq ft of new supply.
“The key office markets in southern cities evolved and commanded the highest share of the pan-India absorption and new completions. Rentals are expected to rise in these cities on the back of renewed demand as many large conglomerates are calling their employees back to the office,” he observed.