Mumbai saw a six-year high absorption in office spaces at 8.5 million square feet in 2023, registering a year-on-year growth of 18%, according to a CBRE report.
In doing so, the city has breached pre-Covid level. Leasing activity was led by the infotech segment with a 46% share, closely followed by the non-SEZ segment with 45% and SEZs accounting for a 9% share, said the report released by CBRE South Asia on Thursday.
It said that Mumbai office space take-up was driven by small-sized (less than 10,000 sq ft) deals during the October-December 2023 period. On a pan-India basis, the office property market witnessed a gross absorption of 61.6 million sq ft during 2023 across 9 cities, registering a growth of 7%, marking a 4-year high leasing activity after it touched the peak in 2019 with 65 million sq ft.
Development completions increased by about 13% to reach 56.7 million, an all-time high during 2023. Developers continued to exhibit their efforts towards sustainability, with nearly half of the newly completed developments during 2023 being green-certified (LEED or IGBC).
As per the report, Bengaluru, Hyderabad and Chennai accounted for nearly 57% of the yearly leasing activity. On an annual basis, BFSI firms drove leasing with a share of (22%), followed by technology companies (21%), engineering & manufacturing companies (15%) and flexible space operators (14%). American multinationals led the leasing activity in the BFSI sector, accounting for about 48% of the total leasing as they leased office space for their global capability centres (GCCs).
Office space take-up was dominated by small- (less than 10,000 sq ft) to medium-sized (10,000 – 50,000 sq ft) transactions in 2023 with a share of 84%. The share of large-sized deals (greater than 100,000 sq ft) in 2023 marginally increased to 7% from 6% in 2022.
Bengaluru and Hyderabad dominated large-sized deal closures in 2023, followed by Chennai and Delhi-NCR, while a few such deals were also reported in Pune and Mumbai. December 2023 quarter witnessed the highest ever quarterly office leasing activity.
Leasing during the quarter increased by 16% quarter-on-quarter and 20% year-on-year to 19.0 million sq ft. Bengaluru, Hyderabad and Chennai accounted for nearly 60% of the quarterly leasing activity.
Quarterly office leasing was driven by BFSI players and technology corporates which accounted for a share of 20% each, followed by engineering and manufacturing companies (16%), flexible space operators (12%), research, consulting & analytics firms (5%) and media & marketing firms (5%).
During the quarter, domestic firms led leasing with a 45% share, primarily led by flexible space operators and BFSI firms.