Rents throughout most cities exhibited a slight upward pattern, reflecting the constructive market sentiment and rising demand. (Representative picture)
Mumbai’s provide-constrained market witnessed the sharpest emptiness fee drop by 1.22% factors to ~17%.
The Indian workplace market continues its constructive trajectory, registering a internet absorption of 11.5 Million Square Feet (MSF) throughout the highest 8 cities in Q1-24. According to Cushman & Wakefield’s Q1 workplace information, that is the third-highest degree recorded within the final 5 years, demonstrating a sturdy urge for food for workplace area amongst companies. Net absorption is a barometer of actual demand or growth of occupied area available in the market.
While this quarter’s internet absorption was 38% decrease than the distinctive This autumn-2023, it was a 44% enhance over Q1 2023, indicating continued area occupation by companies.
According to the report, Bengaluru and Mumbai emerged because the main markets, absorbing 3.6 MSF and a couple of.5 MSF of area, respectively. They have been adopted by Hyderabad at 1.6 MSF, Delhi-NCR at 1.5 MSF and Pune at 1.3 MSF, Ahmedabad and Kolkata at 1 MSF, and Chennai at .8 MSF.
Gross Leasing Volume
According to the report, the Gross Leasing Volume (GLV) additionally remained strong at over 20 MSF, a 20% lower q-o-q however a steep rise of 33% on a y-o-y foundation. Gross leasing quantity, which elements in all leasing exercise available in the market, together with renewal of contracted phrases by corporates, is a sign of general market exercise. This quarter’s figures signify a resilient market with sustained curiosity in workplace area.
Nearly a 3rd of your entire India GLV was recorded in only one metropolis, Bengaluru (6.7 MSF), adopted by Mumbai (4.8 MSF) with a share of 1-quarter. The two cities mixed had a share of over 57% in whole leasing volumes for the primary quarter.
A major contribution to Bengaluru’s wholesome leasing quantity was 4.8 MSF of contemporary leasing exercise, and the town accounted for 33% of whole contemporary area leasing throughout the highest-8 markets. The metropolis additionally acquired near 2.0 MSF of pre-commitments throughout Q1-24, thereby making it the biggest contributor amongst all.
In line with the pattern seen within the latest previous, contemporary leasing continues to dominate GLV with 72% share, with pre-commitments and time period renewals taking on the stability 28% in GLV.
Key sectors
Among the sectors, IT-BPM and Engineering & Manufacturing sectors emerged as the most important drivers of demand, contributing over 45% to the GLV. The BFSI and Flex Space leasing adopted with ~17% and ~11% shares, respectively.
Global Capability Centers (GCCs) took up near 4.5 MSF (~22% share in GLV) of workplace area in Q1, additional consolidating the assumption that this sector is having a constructive affect on the workplace market of India.
The first quarter additionally witnessed near 13 MSF of recent provide, persevering with the momentum of wholesome provide from earlier quarters. The cities that noticed the largest provide additions have been Hyderabad (2.9 MSF), Bengaluru (2.9 MSF) and Delhi-NCR (2.8 MSF). These three, collectively accounted for over 67% of the entire provide within the high-8 cities.
The new provide, coupled with sturdy absorption, led to a slight decline within the nationwide emptiness fee to 18.1%. Notably, Mumbai’s provide-constrained market witnessed the sharpest emptiness fee drop by 1.22% factors to ~17%.
Rents throughout most cities exhibited a slight upward pattern, reflecting the constructive market sentiment and rising demand.
Anshul Jain, chief govt, India & Southeast Asia and head of Asia Pacific, tenant illustration stated, “The strong leasing, coupled with net absorption of 11.5 MSF– the third highest in the past five years (the previous being in Q4 2023 and Q2 2019) – signifies a surge in tenant interest for office space. As witnessed in the previous quarters, the impressive surge in office demand is primarily driven by fresh leasing. We are confident that a balanced supply pipeline and continued tenant demand will propel further growth in the Indian office market.”
Veera Babu, MD, tenant illustration, India stated, ” The tightness in emptiness charges, notably in key markets like Bengaluru, Pune, and Mumbai, is noteworthy. This pattern persists regardless of new provide additions in most cities, indicating a powerful and rising demand for workplace area. This might push occupiers to behave proactively by pre-committing within the upcoming quarters, making certain they safe the best area for his or her wants. Overall, the outlook for the workplace sector stays constructive for the yr forward.”
