Demand for office space jumped 92% between October and December in six major cities due to better demand for workspace from corporates and coworking operators, according to Colliers India.
The report by real estate consultant Colliers India shows that gross rental of office space stood at 20.2 million sq ft in the fourth quarter of this calendar year, compared to 10.5 million sq ft last year.
Helped by strong demand in the December quarter, total office space leasing increased 16 percent to 58.2 million square feet in calendar year 2023, up from 50.3 million square feet last year.
Colliers tracks office demand and supply across 6 cities: Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune. Gross rentals or absorptions do not include lease renewals, pre-commitments and transactions for which only a letter of intent has been signed.
According to the data, office leasing in Bengaluru increased by 58 per cent to 5.5 million sq ft during the October-December period, compared to 3.5 million sq ft last year.
Chennai saw its area increase four-fold from 1 million square feet to 4.3 million square feet. In Delhi-NCR, the demand for office space increased by 61 per cent from 1.9 million sq ft to 3.1 million sq ft.
Gross rental of office space in Hyderabad increased by 57 per cent from 1.7 million square feet to 2.7 million square feet. Mumbai saw an 87 per cent increase in demand from 1.4 million sq ft to 2.6 million sq ft.
In Pune, office rental doubled to 2 million sq ft between October and December this year, compared to 1 million sq ft the previous year.
Arpit Mehrotra, Managing Director and Head, Office Services, Colliers India, said, “The Indian office market not only overcame the initial uncertainties, but also exceeded expectations and emerged successfully, recording impressive gross absorption. of 58 million square feet in 2023. » The demand dynamics, particularly observed during the last quarter, will pave the way for an optimistic start to 2024, he added.
“Despite unforeseen events, a stable economic outlook bodes well for India’s commercial real estate and office markets to continue to see continued interest from domestic and foreign occupiers,” Mehrotra said.
Giving details on the demand drivers in 2023, Colliers India highlighted that the technology sector’s contribution to office leasing has declined steadily from around 50 per cent in 2020 to 25 per cent in 2023.
Sectoral contributions from the BFSI and Engineering and Manufacturing sectors in particular have almost doubled from 10-12 percent in 2020 to around 16-20 percent in 2023.
Interestingly, in 2023, leasing by engineering and manufacturing players (26% share) has exceeded the emancipated demand from technology companies (22% share) in the Bangalore technology hub. Demand from flexible space operators increased 24 percent to 8.7 million square feet in 2023.
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