CBRE South Asia Pvt. Ltd announced the findings of its latest office report, ‘CBRE India Office Figures Q2 2023’. According to the report, office leasing in Apr-June ’23 in Mumbai stood at 1.3 mn. sq. ft. Key sectors that drove absorption included BFSI (31%), technology (28%), and engineering & manufacturing (13%) in April-June’23.
The report further highlighted that Mumbai office space absorption was driven by medium-sized (10,000 – 50,000 sq. ft.) deals. Also, non-IT developments led the supply and absorption with 100% and 50% share respectively.
On a pan-India basis, the highlighted that office leasing activity increased by 12% Q-o-Q and touched 13.9 mn. sq. ft. during the April-June’23 period. Bangalore, Chennai, and Pune led the absorption in Q2 2023, accounting for about 59% of the transaction activity.
During the quarter (April-June’23), technology companies witnessed an uptick in activity, accounting for 29% of the leasing, followed by flexible space operators (18%), engineering & manufacturing firms (17%) and BFSI corporates (17%). Leasing in the BFSI sector was driven by deal closures by global capability centres of BFSI corporates, Indian banks, and insurance firms. Most of these corporate are focusing on expanding their footprint.
Total office space supply stood at 12.4 million sq. ft. in April-June’23, an increase of 6% Q-o-Q. Hyderabad, Bangalore, Chennai led supply addition during the quarter, accounting for a cumulative share of 84%. The non-SEZ segment continued to dominate development completions in (April-June’23), SEZ supply accounted for 24% of the new developments, compared to 11% in (April-June’23). The report points out increasing focus of developers on sustainability, 46% of the newly completed developments during the current quarter were green-certified (LEED or IGBC).
Similar to the previous quarter, domestic firms continued to lead the absorption in April-June’2023 and H1 2023, accounting for a share of 43% and 46%, respectively. This was mainly led by flexible space operators, technology corporates and BFSI firms.
Small-sized (less than 10,000 sq. ft.) to medium-sized (10,000 – 50,000 sq. ft.) transactions drove office space take-up in April-June’23 with a share of 85% – a marginal increase on a Q-o-Q basis. The share of medium-sized deals increased to 54% in Q2 2023 from 48% in the previous quarter. In Q2 2023, the share of large-sized deals (greater than 100,000 sq. ft.) remained similar to Q1 2023 at 6%. Hyderabad dominated large-sized deal closures in Q2 2023, while a few such deals were also reported in Pune, Chennai, Bangalore, and Delhi-NCR.
During Jan-June’23, leasing activity in the office sector declined by 12% Y-o-Y to about 26.4 million sq. ft. Further, absorption in Jan-June’23 was led by Bangalore, Chennai, and Delhi-NCR, which together accounted for 60% of the leasing. Bangalore, Hyderabad, and Delhi-NCR led supply addition in Jan-June’23 with a combined share of 68%. In H1 2023, about 24.2 million sq. ft. of supply was recorded, a decline of 4% Y-o-Y.
In H1 2023 (Jan-June’23), technology companies held the highest share in leasing activity at 24%, followed by BFSI firms (20%), flexible space operators (20%) and engineering & manufacturing firms (14%). Global multinationals accounted for about 63% of the total leasing by the technology sector during H1 2023.