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Bengaluru-based Vestian on Thursday released its quarterly office market report The Connect Q2 2023, stating that the combined office leasing in Bengaluru, Chennai and Hyderabad stood at 8.2 million square feet, out of a total of 13.9 million square feet office absorption in the April-June quarter this year.
Across seven major cities, the total office leasing fell 6 per cent to 13.9 million square feet during April-June against 14.8 million square feet in the year-ago period due to delays in decision-making by large domestic firms and MNCs amid global uncertainties.
However, the demand was up 17 per cent compared with the previous quarter.
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”The resilience of the Indian economy was reflected in the Indian office market as well, with increased absorption and a fading impact of funding challenges,” he said.
He highlighted that the technology sector dominated leasing activities, followed by engineering and manufacturing, while flexible spaces also gained traction due to cautious leasing decisions amid market uncertainty.
”Hiring intentions for Q3, 2023 have improved, indicating optimism about India’s growth prospects…As global markets stabilise, the second half of the year is expected to see increased real estate activities across the country,” Rao said.
As per the data of April-June 2023 against April-June 2022, Chennai saw an 83 per cent rise in leasing to 2.2 million square feet from 1.2 million square feet.
The leasing in Bengaluru decreased 12 per cent to 3.7 million square feet from 4.2 million square feet.
Hyderabad witnessed a marginal fall of 4 per cent to 2.3 million square feet from 2.4 million square feet.
The leasing in Mumbai fell 25 per cent to 1.8 million square feet from 2.4 million square feet. But in Pune, the demand was up 6 per cent to 1.8 million square feet from 1.7 million square feet.
Vestian data showed that office leasing in Delhi-NCR remained subdued and fell 5 per cent to 2 million square feet from 2.1 million square feet.
In Kolkata, the leasing activities plunged 88 per cent to 0.1 million square feet from 0.8 million square feet.
The technology sector captured the highest market share of 26 per cent in the June quarter. While the engineering and manufacturing sector accounted for 19 per cent of the leasing activity, flexible spaces captured a share of 18 per cent, the report said. Vestian said the South dominance was seen in the January-June period as well, with a share of the three south Indian cities at 57 per cent.
The combined leasing in Bengaluru, Hyderabad and Chennai stood at 14.6 million square feet out of the total 25.8 million square feet across seven major cities during the January-June period.
Commenting on the trend, NCR-based realty firm AIPL Group Director Ishaan Singh said there has been a steady increase in demand for Grade A office space. ”We anticipate this positive trend to persist, given our strong optimism about India’s growth prospects. The Indian economy’s resilience is evident in the office market, as there has been a notable rise in demand and absorption rates,” Singh said.
Vestian is an occupier-focused workplace solutions firm specialising in commercial, residential, industrial, retail and hospitality sectors. Headquartered in Chicago, Vestian has offices across the US, India, China, UK, Sri Lanka and the Middle East.