Office space leasing activity up 66% YoY in Jan-Sept of 2022: CBRE report

Benguluru, Delhi-NCR and Chennai led the space absorption, together accounting for 62% of total transaction activity in the first nine months of the Calendat year

The office sector in India witnessed a gross absorption of 42.1 million sq ft during the first nine months of 2022, registering a growth of 66 per cent YoY. Supply, on the other hand, grew by 4 per cent to 35.6 million sq ft, according to a CBRE report.

According to the report, Benguluru, Delhi-NCR and Chennai led the space absorption, together accounting for 62 per cent of the total transaction activity in the first 9 months(9M) of 2022.

Benguluru, followed by Mumbai and Delhi-NCR, led two-thirds of the transaction activity in the third quarter(Q3). However, absorption in the first nine months of 2022 was led by Benguluru, Delhi-NCR and Chennai, accounting for over two-thirds of the space take-up.

After a record show in the second quarter, leasing activity moderated by 30 per cent, reaching 12.7 million sq ft in Q3 of 2022. However, space take-up in 9M 2022 rose 66 per cent on an annual basis to 42.1 million sq ft.

“Compared to 9M 2021, the office sector witnessed a phenomenal recovery in leasing activity in 9M 2022 with the easing of COVID-19 restrictions, a gradual acceleration of return to the office (RTO), expansion by occupiers and the release of post-pandemic pent-up demand,” said Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE.

He added that though growth in hiring and technology spending is expected to moderate in the short- to medium-term after witnessing an increase post the pandemic, long-term fundamentals are expected to be resilient.”

Moreover, Bengaluru, Delhi-NCR, and Hyderabad continued to lead supply addition, accounting for about two-thirds of the overall completions both during the quarter and in 9M 2022. The report said that the technology firms, flexible space operators, and BFSI companies led the space take-up, together accounting for more than two-thirds of the overall leasing in Q3 2022.

The technology sector would continue to drive leasing activity during the remaining period of 2022. Space take-up by sectors such as BFSI, flexible spaces, engineering & manufacturing, and life sciences is also anticipated to grow on an annual basis, said Ram Chandnani, managing director, Advisory & Transactions Services, CBRE India.

Supply also dipped during the third quarter, declining by 43 per cent (QoQ) to touch about 9.5 million sq ft and new project completions in 9M 2022 grew marginally by 4 per cent on a yearly basis to reach 35.6 million sq ft, said the report.