Exploring the Phenomenal Rise in Office Space Absorption Across Indian Cities in 2023
The last quarter of 2023 saw the Indian office leasing segment break all records with 58.2 million square feet of gross absorption. According to insights by a leading real estate consultancy, while office absorption stood at 9.06 million sq. ft in the last quarter of 2023, the final quarter of 2024 witnessed a jump to 18.63 million sq. ft during the same period.
The jump in office space absorption in the country can be attributed to various factors. From the country’s robust economic growth to progressive infrastructure development to a liberal regulatory ecosystem, many factors have contributed to arousing positive investment sentiments, culminating in investments by both foreign and domestic companies. Another reason for the jump, according to industry insiders, is that the trepidation many fence-sitting occupiers were facing last year due to rising inflation and fear of an impending recession has been subdued due to positive macroeconomic factors.
Though the increase in office space absorption was observed country-wide, this momentum was led by none other than India’s leading IT city, Bangalore. Of the country-wide absorption, Bangalore witnessed the highest absorption of office space, with the city recording an unprecedented 15-time jump in net office leading.
In addition to attaining the highest volume of office spaces, Silicon City also registered the maximum increase percentage-wise during the last quarter of the current year. The study reported net office leasing or absorption in Bangalore skyrocketing from 5,18,622 sq. ft. in Q4 2022 to 80,50,266 sq. ft. in Q4 2023.
Bangalore is not the only city, however, that has witnessed a surge in leasing activity. Ahmedabad also detected a surge in corporate space leasing, doubling from 2,10,010 sq. ft. in Q4 2022 to 4,92,795 sq. ft. in Q4 2023. Chennai experienced an amplification in leasing from 10,59,307 sq. ft. to 14,48,595 sq. ft. Pune, also popularly known as Oxford of the East, saw a 58 percent growth in leasing to 1,898,143 sq. ft. from 11,97,733 sq. ft.
The City of Nawabs experienced a significant increase, surging over threefold to reach 2,618,424 square feet from its previous size of 788,624 square feet. In contrast, Kolkata saw a more modest growth of almost 2 percent, with demand reaching 257,700 square feet compared to the previous size of 253,737 square feet.
Conversely, the country’s two major metropolises, Mumbai and Delhi-NCR, saw a decline in office space absorption. According to the data from the report, the leasing activity in Mumbai experienced a 9 percent decrease, dropping from 2,472,259 square feet to 2,246,920 square feet. Similarly, the demand in Delhi-NCR also saw a decline of 37 percent, decreasing from 2,561,752 square feet to 1,625,514 square feet.
To summarise, in Q4 2023, India’s office leasing hit a record 58.2 million sq ft, led by Bangalore’s unprecedented 15-fold increase. Other cities like Ahmedabad, Chennai, and Pune also saw growth, while Mumbai and Delhi-NCR faced declines. These trends reflect the dynamic interplay of economic factors in shaping India’s evolving office leasing landscape.
