Office leasing in Mumbai reached 1.3 million square feet in Q2 2023, as per CBRE South Asia Pvt. Ltd's latest report. The uptake was largely driven by the BFSI, technology, and engineering & manufacturing sectors. Notably, mid-sized transactions dominated the leasing scene. Nationwide, leasing activity grew by 12% Q-o-Q. Domestically, flexible space operators, technology firms, and BFSI led the absorption. Despite a slight downturn in H1 2023, the resilient demand underscores the positive trajectory for India's commercial real estate sector.
The most recent quarterly report by CBRE South Asia Pvt. Ltd paints an optimistic picture of the Mumbai office leasing scene for Q2 2023, revealing a substantial uptake in office space, predominantly driven by the Banking, Financial Services and Insurance (BFSI), technology, and engineering & manufacturing sectors.
According to CBRE's ‘India Office Figures Q2 2023’ report, office leasing in Mumbai for the period April-June 2023 reached 1.3 million square feet, where BFSI, technology, and engineering & manufacturing sectors made up 31%, 28%, and 13% of the absorption respectively. The report also noted that the bulk of the activity was underpinned by mid-sized transactions, encompassing 10,000 to 50,000 sq. ft. deals.
In a nationwide context, Q2 2023 witnessed a 12% quarterly growth in office leasing, touching 13.9 million sq. ft., with Bangalore, Chennai, and Pune accounting for nearly 59% of the total transactions. During this period, technology firms constituted 29% of leasing activities, followed by flexible space operators (18%), engineering & manufacturing firms (17%) and BFSI corporates (17%).
Additionally, the report detailed that total office space supply increased by 6% quarter-on-quarter, standing at 12.4 million sq. ft. Hyderabad, Bangalore, and Chennai led the charge in supply addition during the quarter, contributing to 84% cumulatively. With a growing emphasis on sustainability, 46% of the newly completed developments in the quarter earned green certifications (LEED or IGBC).
The dominance of domestic firms in absorption continued unabated during Q2 2023 and H1 2023, accounting for 43% and 46% shares, respectively. These were primarily led by flexible space operators, technology corporations, and BFSI firms.
Office space absorption in April-June’23 was majorly driven by small to medium-sized transactions, claiming an 85% share, up marginally from the previous quarter. Meanwhile, the proportion of large-sized deals (greater than 100,000 sq. ft.) remained stable at 6%, predominantly concentrated in Hyderabad.
However, during H1 2023, there was a slight downturn in leasing activity, marking a 12% YoY decline to about 26.4 million sq. ft. The period saw Bangalore, Chennai, and Delhi-NCR leading in absorption, jointly accounting for 60% of the leasing. Despite a marginal 4% YoY decrease in supply during H1 2023, a total of about 24.2 million sq. ft. was recorded.
In conclusion, the report underlines a resilient and growing office leasing market in India during Q2 2023, underpinned by technology companies and BFSI firms. As businesses continue to navigate through the evolving commercial real estate landscape, the robustness of office space demand indicates a positive trajectory for the sector, which is expected to be bolstered by sustainability efforts and the rise of flexible workspaces.
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