Office vacancy levels dips by 1.9% across 6 cities, tech sector leads

The Year-on-Year (YoY) vacancy levels of office spaces has dropped by 1.9% across six cities of India to 16.6%, indicating strong recovery and stability in commercial markets.

Staff ReporterUpdated: Wednesday, January 04, 2023, 02:47 AM IST
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Mumbai: The Year-on-Year (YoY) vacancy levels of office spaces has dropped by 1.9% across six cities of India to 16.6%, indicating strong recovery and stability in commercial markets.

Albeit higher than the pre-pandemic levels, vacancy levels have declined every successive quarter of 2022 as leasing momentum remained positive. Total leasing during the year was noted at 50.3 million sqft, the highest in any year.

Occupiers went ahead with their expansion plans after being in a wait-and-watch mode for two years.

While the year 2022 saw robust demand, there was some weakness in market activity in Q4 2022 as occupiers took a cautious stance amidst global recessionary conditions. As a result, gross absorption in Q4 was about 21% lower than the average seen during Q1-Q3.

Ramesh Nair, Chief Executive Officer, India and Managing Director, Market Development, Asia, Colliers, said, “It is encouraging to see the office market stabilising this year with vacancies dropping after a gap of two years. Interestingly, Banking, Financial Services and Insurance (BFSI) companies have expanded rapidly this year, with Indian banks as well as global financial institutions leasing large office spaces.”

Mr Nair said that leasing by BFSI almost doubled since last year, accounting for a 14% share in total leasing, equivalent to flex space. “This resonates with the earnings boom seen in the BFSI sector in 2022. Mumbai witnessed the highest BFSI leasing at 40% share, as financial institutions made their comeback to offices,” he said.

The leasing was led by the technology sector with 34% share followed by flex spaces and BFSI with 14% each, engineering and manufacturing sector picked up 10% of the overall share in the pie.

Bengaluru had the highest total leasing area at 16.2 million sqft, accounting for 33% of the 50.3 million sqft leased in the top six cities of India. The National Capital Region saw 6.5 million sqft of area getting leased out, followed by Mumbai at 7.1 million sqft.

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