Mumbai office market witnessed healthy leasing activity with 3.5 million square feet (MSF) gross leasing volume (GLV) in third quarter, a 26.9% quarter-on-quarter growth.
This is the highest GLV across the top eight cities for the quarter, with the total leasing standing at 15.1 million square feet.
Mumbai is followed by Delhi-NCR (3.4 MSF), while Hyderabad (2.4 MSF) and Bengaluru (2.2 MSF) are a distant third and fourth.
Chennai (1.8 MSF) follows next to get into the list of top five contributors for the quarter, data released by Cushman and Wakefield said.
While the GLV recorded in third quarter is lower than the second quarter volume by 13%, it is in line with the volume recorded in the first quarter of the year, showcasing sustained momentum in the sector.
The report highlights that the total leasing volume YTD, meanwhile stands at 48.2 MSF. Looking at the average quarterly run rate, the leasing volume may reach close to 64 MSF for the entire 2023.
The office net absorption of Mumbai for the quarter also looks promising, exhibiting robust demand for office spaces in the city.
In Q3FY23, the net absorption recorded is 1.14 MSF, which is more than 120% Q-o-Q growth and 11.3% Y-o-Y growth.Mumbai has witnessed a consistent fresh space demand across prominent markets like BKC and Lower Parel and higher term renewals activity across suburban markets like Powai and Malad Goregaon.
When it comes to the sectors actively contributing to Mumbai’s office leasing, the report observed that in Q3FY23, the IT-BPM, captive segment, engineering and manufacturing, telecom, and BFSI sectors have the highest sectoral shares in the leasing volumes. In the city, office leasing activity by the engineering and manufacturing sector grew by 48% over the same period last year.
Delhi-NCR recorded the second-highest GLV of 3.4 MSF this quarter after Mumbai, though it witnessed a 4% dip on a Q-o-Q basis.
As far as sectoral share in leasing volume is concerned, leasing by IT-BPM and BFSI sectors grew by 56% and 31% Y-o-Y, respectively in Delhi-NCR. Meanwhile, in the East, Kolkata witnessed robust leasing activity.
Though Kolkata’s Q3FY23 GLV stands at 0.4 MSF given the small size of the market, from a growth point of view, it is an 87.8% Q-o-Q growth and almost a 40% Y-o-Y growth. The net absorption is also healthy, recording a 29% growth as compared to Q3-22.
Anshul Jain, head of APAC Tenant Representation and MD, India and South East Asia said, “The office segment is seeing major shifts in terms of evolving occupier demands.
India is currently in the spotlight as a preferred destination for business expansion, the top-tier markets are destined to witness more innovation and traction in the real estate place.
“We can expect a healthy sustained demand for Grade-A, compliant, and sustainable office assets in these markets.”