Office space demand in January-March set to rise 35% in 6 cities; 2-fold jump in Hyderabad: Colliers

Office space demand across six major cities continues to be strong, with gross leasing of workspaces set to rise 35 per cent annually in the January-March quarter, according to Colliers India. Real estate consultant Colliers India has released the data on the office market for the January-March period, nine days before the closing of the current quarter.

As per the data, the total gross leasing of office space is estimated to rise to 13.6 million square feet across six major cities -- Bengaluru, Delhi-NCR, Mumbai, Chennai, Hyderabad and Pune -- during the first quarter of 2024.

The leasing stood at 10.1 million square feet (sq ft) in the year-ago period.

The demand is set to grow in Hyderabad, Mumbai, Bengaluru and Delhi-NCR, but may fall in Chennai. In Pune, the demand is likely to remain flat at 0.8 million sq ft.

According to the data, the leasing of office space in Hyderabad is estimated to jump more than two times to 2.9 million square feet during January-March from 1.3 million square feet in the year-ago period.

In Mumbai, the demand is expected to surge 90 per cent to 1.9 million sq ft from 1 million sq ft. Office space leasing in Bengaluru is set to rise 25 per cent to 4 million sq ft from 3.2 million sq ft.

In Delhi-NCR, the demand is expected to rise 14 per cent to 2.5 million sq ft from 2.2 million sq ft.

Office demand in Chennai is estimated to fall 6 per cent to 1.5 million sq ft during January-March this year compared to 1.6 million square feet in the year-ago period.

Gross absorption or leasing data does not include lease renewals, pre- commitments and those deals where only a letter of intent has been signed.

When asked about the reason for releasing the data well before the quarter ends, Colliers India said the company "considers only closed transactions while accounting for the gross absorption (leasing) numbers. Larger and major deals expected to close have been factored in, as only 3 working days of the quarter are left in the coming week".

Commenting on the trend, Arpit Mehrotra, Managing Director-Office Services, Colliers India, said Hyderabad continues to strengthen its role as a prominent commercial office market in the country.
"The city offers occupiers, including Global Capability Centers, considerable price arbitrage compared to other markets," he added.

Mehrotra noted that the government policies, continuous infrastructure upgrades and a favourable business ecosystem make Hyderabad a compelling destination for investors, occupiers, and leading real estate developers.

During Q1, Colliers India Senior Director and Research Head Vimal Nadar said, the occupiers from technology, engineering and manufacturing, and BFSI sectors collectively accounted for 58 per cent of total leasing activity across the top 6 cities.

On the office market, flexible office space operator Urban Vault co-founder and CEO Amal Mishra said the office demand continues to be strong across major cities from domestic and global companies, driven by high economic growth, cost-effective real estate and availability of skilled talent.

"The demand for flexible workspace, including managed office space, is also growing," said Mishra, who has many centres in Bengaluru.