A report released by Colliers on Saturday stated that “2023 has begun on a cautious note registering a 19% Year-on-Year (YoY) decline in leasing activity across top six cities at 10.1 mn sq ft during the first quarter.” Diving deeper, the report found that leasing of commercial spaces by co-working space operators and technology companies is almost the same now. The leasing by flex operators accounted for 20%, which is a couple of percentage behind the technology sector’s share of 22%.
Technology sector and flex operators account for 42% leasing
Both of them together accounted for nearly 42% of the total leasing across the top six cities in India. The statistics showed that as of Q1 2023 the flex occupiers leased 2.1 million sq feet of space during Q1 2023, just less than the technology sector that is facing headwinds.
On a sequential basis leasing continued to drop, indicating delayed decision making by occupiers amidst continued economic uncertainties. YoY, Pune witnessed the highest fall at 61% followed by 30% decline in Hyderabad, 20% in Bengaluru and 19% in Mumbai. It is only Delhi National Capital Region and Chennai that saw an increase in YoY Grade A gross absorption by 18% and 7%, respectively.
Share of technology sector declines
“Share of the technology sector has declined steadily from 34% in Q1 2022 to 22% in Q1 2023, as corporates continue to focus on building operational efficiencies through a hybrid model. While hybrid working has impacted demand for conventional office spaces, it has also fueled demand for flex spaces across top markets. As long-term growth drivers for the technology sector remain strong in India, the technology sector will continue to drive office leasing activity through a mix of conventional and flex spaces,” said Peush Jain, Managing Director, Office services, India, Colliers.
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