Office space absorption across six cities dips 11% in Jan-Mar 2023: Report
NEW DELHI: Office space absorption across India’s six major cities i.e. Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune stood at 14 million sq ft, registering a dip of 11% year-on-year in Jan-March 2023, according to a recent report by Savills India.
Bengaluru, Delhi-NCR and Chennai together accounted for two-thirds of quarterly demand.
“While quarterly absorption has improved in Q1 2023, there is evidence of global headwinds and related pressures, as seen in 11% annual decline in gross space absorption compared to Q1 2022. The demand is expected to pick up in due course, but Q1 performance implies that estimates for full-year 2023 remain biased on the side of caution,” said Naveen Nandwani, managing director (Commercial Advisory and Transactions), Savills India.
Flexible workspaces were the leading absorption driver for office spaces and accounted for 27% of gross absorption for Q1 2023. IT-BPM and BFSI sectors accounted for 23% and 16% demand share respectively.
Additionally, the office space witnessed a 31% year-on-year decrease in new supply infusion which stood at 13.1 million sq ft in Q1 2023. Maximum supply infusion was witnessed in Hyderabad and Pune, with a cumulative share of over 50%.
Total office stock across top 6 cities stands at 717.1 million sq ft as on Q1 2023 while overall vacancy levels across stood at 18.4% during the said period.
Hyderabad witnessed leasing activity of around 1.8 million sq ft, corresponding to a strong year-on-year increase of 50%, with stable rentals across micro-markets.
Savills India expects 2023 to witness gross absorption to the tune of 48.5 million sq ft, meanwhile annual supply infusion is expected to stand at 61.5 million sq ft by the year end.