Despite challenges worldwide, the Indian office market keeps growing positively. In Q1 2024, it absorbed 11.5 million square feet of office space across the top eight cities, as per Cushman & Wakefield’s Q1 office data.
This marks the third-highest absorption level in the last five years, showing strong demand for office spaces from businesses. Net absorption reflects the real demand or expansion of occupied space in the market.
Though this quarter saw a 38% decrease compared to Q4-2023, it’s a 44% increase from Q1 2023, indicating ongoing occupancy by businesses.
Bengaluru and Mumbai led the way, absorbing 3.6 million and 2.5 million square feet, respectively. They were followed by Hyderabad (1.6 million), Delhi-NCR (1.5 million), Pune (1.3 million), Ahmedabad and Kolkata (1 million each), and Chennai (0.8 million).
Gross Leasing Volume (GLV) stayed strong at over 20 million square feet, a 20% decrease from the previous quarter but a significant 33% rise year-on-year. GLV, which includes all leasing activity, is a sign of overall market activity.
Bengaluru recorded nearly one-third of India’s GLV (6.7 million square feet), followed by Mumbai (4.8 million), making up over half of the total leasing volumes for the quarter.
Fresh leasing dominated GLV with a 72% share, while pre-commitments and term renewals made up the remaining 28%.
The IT-BPM and engineering sectors were the main demand drivers, contributing over 45% to GLV. BFSI and flex space leasing followed with around 17% and 11% shares, respectively.
Global Capability Centers (GCCs) leased about 4.5 million square feet (around 22% of GLV), showing a positive impact on India’s office market.
The quarter saw nearly 13 million square feet of new supply, mainly in Hyderabad, Bengaluru, and Delhi-NCR, which together accounted for over two-thirds of the total supply in the top 8 cities.
The new supply, along with strong absorption, led to a slight decline in the national vacancy rate to 18.1%. Mumbai’s vacancy rate dropped the most, by 1.22 percentage points, to around 17%.
Rents across most cities are on the rise, indicating a healthy market trend.
Also read : Decrease in Unsold Homes in 9 Cities, NCR Sees 12% Drop: Study