Office leasing activity in nine major Indian cities rose by 33 percent year-on-year, reaching 15.8 million sq. ft. in Q3 2023, according to CBRE South Asia Pvt. Ltd. The BFSI sector accounted for 29 percent of total office leasing during the quarter. Major cities like Mumbai, Bangalore, and Hyderabad led the leasing activity, representing 60 percent of transactions. The share of BFSI firms in leasing increased from 16 percent in Q2 2023 to 29 percent in Q3 2023. The tech sector accounted for 23 percent of leasing, while engineering and manufacturing comprised 10 percent. Office space supply rose 94 percent YoY to 19.3 million sq. ft.
A recent report from CBRE South Asia Pvt. Ltd. underscores the dynamic shifts in India's office leasing landscape during the July–Sep'23 period across nine major cities. The report reveals a remarkable 33 percent year-on-year surge in office leasing activity, resulting in a total transaction volume of 15.8 million square feet. The Banking, Financial Services, and Insurance (BFSI) sector played a pivotal role, contributing significantly with a 29 percent share of the total office leasing during the quarter. The prominent cities of Mumbai, Bangalore, and Hyderabad emerged as key players, collectively accounting for an impressive 60 percent of all leasing transactions.
Notably, the BFSI sector's leasing share experienced a substantial ascent, surging from 16 percent in the preceding quarter (Apr-Jun'23) to an impressive 29 percent in Jul-Sep'23. Substantial deal closures by global capability centres of BFSI corporations primarily fuelled this remarkable growth. Concurrently, Indian banks and insurance firms continued their expansion efforts across the country.
In addition to the BFSI sector, technology companies made a significant impact, contributing 23 percent to the leasing activity. Engineering and manufacturing companies, as well as life sciences firms, each accounted for 10 percent of the leasing share, while flexible space operators and research, consulting, and analytics firms followed with 8 percent and 7 percent, respectively.
American and domestic firms shared an equal stake of 42 percent each in the absorption of office spaces during the Jul-Sep '23 period. The report also sheds light on the robust growth in office space supply, which soared to an impressive 19.3 million square feet across the nine cities, marking an outstanding 94 percent year-on-year increase. Bangalore, Hyderabad, and Pune took the lead in new completions during July–Sep'23, collectively representing 77 percent of the total supply.
Notably, the non-SEZ (Special Economic Zone) sector took centre stage in development completions during the quarter, increasing its share from 75 percent in the previous quarter (Apr-Jun) to a remarkable 95 percent. This shift reflects the resounding commitment of developers to sustainability, with 53 percent of the completed projects in July–Sep '23 being green-compliant and receiving certifications such as LEED or IGBC.
Small-sized (less than 10,000 sq. ft.) to medium-sized (ranging from 10,000 to 50,000 sq. ft.) transactions continued to drive office space uptake in July-Sep '23, commanding an 86 percent share of the market and maintaining stability on a quarterly basis. Large-sized deals (exceeding 100,000 sq. ft.) showed a slight uptick, increasing from 6 percent in the previous quarter to 7 percent in July-Sep '23.
Leading the charge in large-sized deal closures during the quarter were Bangalore and Hyderabad, with Chennai and Delhi-NCR also contributing significantly. Several similar transactions were reported in Pune and Mumbai, underscoring the diverse and evolving landscape of office leasing in India.
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