Office demand jumps 92% in Oct-Dec in top 6 cities in 2023: Colliers

Real estate consultant Colliers India report shows that gross leasing of office space stood at 20.2 mn sq feet in the fourth quarter of this calendar year from 10.5 mn sq feet in the year-ago period

Office space demand surged 92 per cent during October-December period across six major cities on better demand of workspace from corporates and coworking operators, according to Colliers India.

Real estate consultant Colliers India report shows that gross leasing of office space stood at 20.2 million square feet in the fourth quarter of this calendar year from 10.5 million square feet in the year-ago period.

Helped by strong demand during the December quarter, the total leasing of office space rose 16 per cent to 58.2 million square feet during the 2023 calendar year from 50.3 million square feet last year.

Colliers tracks office demand and supply of 6 cities -- Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune.

Gross leasing or absorption does not include lease renewals, pre-commitments and deals where only a letter of intent has been signed.

According to the data, the office space leasing in Bengaluru rose 58 per cent to 5.5 million square feet during October-December period from 3.5 million square feet in the year-ago period.

Chennai saw more than four-fold jump to 4.3 million square feet from 1 million square feet.

In Delhi-NCR, the demand for office space grew 61 per cent to 3.1 million square feet from 1.9 million square feet.

The gross leasing of office space in Hyderabad increased 57 per cent to 2.7 million square feet from 1.7 million square feet.

Mumbai witnessed a 87 per cent increase in demand to 2.6 million square feet from 1.4 million square feet.

In Pune, the office leasing doubled to 2 million square feet during October-December period of this year from 1 million square feet in the previous year.

Arpit Mehrotra, Managing Director, Head of Office services, Colliers India, said, "The Indian office market not only navigated initial uncertainties but exceeded expectations and emerged successfully, recording an impressive 58 million sq ft of gross absorption during 2023."

The demand momentum, particularly as seen during the last quarter, will pave way for an optimistic start to 2024, he added.

"Notwithstanding unforeseen events, a stable economic outlook augurs well for Indian commercial real estate and office markets will continue to witness steady interest from domestic as well as foreign-origin occupiers," Mehrotra said.

Giving details about demand drivers in 2023, Colliers India pointed out that the contribution of tech sector to office leasing has been steadily decreasing from around 50 per cent in 2020 to 25 per cent in 2023.

The sectoral contributions from BFSI and Engineering & Manufacturing sectors especially have almost doubled, increasing from 10-12 per cent in 2020 to around 16-20 per cent in 2023.

Interestingly, in 2023, leasing by engineering and manufacturing players (26 per cent share) surpassed the demand emancipating from technology firms (22 per cent share) in the tech hub of Bengaluru.

Demand from flexible space operators rose 24 per cent to 8.7 million sq ft in 2023.