Mumbai, Bengaluru and Hyderabad dominated the absorption in Jul-Sep ’23 period, collectively accounting for about 60% of the transaction activity.
The BFSI firms’ leasing share surged from 16% in the Apr-Jun’23 quarter to 29% during the Jul-Sept’23, driven by significant deal closures by global capability centres of BFSI corporates, while Indian banks and insurance firms continued to expand their footprint in the country.
During the Jul-Sep’23 quarter, leasing activity was also driven by technology companies, comprising a 23% share, followed by engineering and manufacturing companies (10%), life sciences firms (10%), flexible space operators (8%), and research, consulting, and analytics firms (7%). American and domestic firms equally lead the absorption in Jul-Sep ‘23 period with a share of 42% each.
“India’s office sector has outperformed expectations this year with sustained absorption, driven by optimistic occupier sentiment and a surge in inquiries. While the office sector in 2023 is likely to perform better than predicted at the beginning of the year, India has demonstrated resilience in the face of global economic challenges and remains one of the most attractive destinations for global corporations establishing their global capability centres (GCCs),” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE.
Simultaneously, domestic companies, particularly in sectors such as BFSI (Banking, Financial Services, and Insurance) and engineering & manufacturing, are displaying an increasing appetite for office spaces in major cities.In the Jul-Sep’23 period, the total office space supply across 9 cities surged to 19.3 million sq. ft., recording a 94% Y-o-Y increase. Bangalore, Hyderabad and Pune dominated new completions in Jul-Sep’23 with a share of 77%. The non-SEZ sector remained at the forefront of development completions in the quarter (Jul-Sep’23), increasing its share from 75% in the previous quarter (Apr-Jun) to 95%.According to the report, highlighting the ongoing sustainability commitment of developers, over half (53%) of the completed projects in Jul-Sep ‘23 period were green-compliant and received green certifications, such as LEED or IGBC.
Small-sized (less than 10,000 sq. ft.) to medium-sized (10,000 – 50,000 sq. ft.) transactions drove office space take-up in Jul-Sep ‘23 with a share of 86%, which was largely stable on a quarterly basis.
The share of large-sized deals (more than 100,000 sq. ft.) saw a slight uptick, from 6% in the previous quarter to 7% in the Jul-Sep ‘23. Bangalore and Hyderabad took the lead in large-sized deal closures during the quarter, with Chennai and Delhi-NCR following suit. A few other such transactions were also reported in Pune and Mumbai.
“This year, we observe occupiers adopting a multifaceted approach that encompasses optimum strategies. Return-to-office plans are gaining traction, characterized by a concerted effort to craft experiential workplaces that cater to all generations of employees. This year, we anticipate a surge in investments in workplace technology, improved coordination across functions, and a heightened emphasis on transforming workspaces,” said Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India.
The popularity of flexible office spaces continues to rise, with an increasing number of occupiers indicating their intent to allocate more than 10% of their portfolios to these solutions.
Above this, sustainability has transitioned from being an option to a priority. Leading occupiers are committing to achieve net-zero emissions by 2050, consequently driving demand for green-compliant buildings. This surge in demand has prompted developers to double their green-certified supply over the past seven years.
