India’s office demand has been affected by global economic uncertainties with gross leasing of workspace falling 19 per cent in January-March across six major cities, according to Colliers India. Real estate consultant Colliers India on Saturday released data on the office market, which showed that the gross leasing fell to 10.1 million square feet in January-March from 12.5 million square feet in the corresponding period of the previous year.
New supply declined 34 per cent during January-March to 9.5 million square feet from 14.4 million square feet in the year-ago period. Gross leasing does not include lease renewals, pre-commitments and deals where only a letter of Intent has been signed.
Colliers India said that the leasing of office space has fallen due to “delayed decision-making by occupiers amidst continued economic uncertainties”.
Bengaluru and Delhi-NCR accounted for half of the total leasing during the first quarter of this calendar year. As per the data, the gross leasing of office space in Bengaluru fell 20 per cent to 3.2 million square feet in January-March from 4 million square feet.
In Chennai, the leasing rose 7 per cent to 1.6 million square feet from 1.5 million square feet.
Delhi-NCR saw an 18 per cent rise in the absorption of office demand to 2.2 million square feet from 1.9 million square feet. The demand for office space in Hyderabad fell 30 per cent to 1.3 million square feet from 1.8 million square feet. Office leasing in Mumbai fell 19 per cent to 1 million square feet from 1.2 million square feet.
In Pune, the absorption of office space declined 61 per cent to 0.8 million square feet in January-March from 2.1 million square feet in the year-ago period.
“Share of the technology sector has declined steadily from 34 per cent in Q1, 2022 to 22 per cent in Q1, 2023, as corporates continue to focus on building in operational efficiencies through a hybrid model,” said Peush Jain, Managing Director, Office services, India, Colliers.
While hybrid working has impacted demand for conventional office spaces, it has also fueled demand for flex spaces across top markets, it added.
As long-term growth drivers for tech sector remain strong in India, Jain said the technology sector will continue to drive office leasing activity through a mix of conventional and flex spaces.
“Although office absorption is currently facing temporary downward pressures, leasing activity will likely pick up especially towards the latter part of the year, driven strong growth fundamentals,” said Vimal Nadar, Senior Director and Head of Research at Colliers India