New supply rose 32% YoY pushing vacancy levels up by 40 bps, says Colliers
Amidst global economic headwinds, demand continued to grow on a sequential basis, indicating a continued occupier confidence, according to Colliers (NASDAQ: CIGI) (TSX: CIGI) report on office space demand across top six Indian cities – Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune.
Bengaluru and Chennai led the demand during Q2 2023, accounting for about half of the total leasing across the top 6 cities.
After witnessing lackluster demand for the last few quarters, Chennai saw a three-fold rise in demand during Q2 2023, led by enhanced occupier activity, Colliers said on 6 July 2023.
It highlighted:
Office demand across top 6 cities up 2% YoY at 14.6 million sq ft;
Engineering & Manufacturing gained significant share at 21%; Technology sector continued to dominate at 26% share;
Leasing by Engineering and Manufacturing firms rose 3X YoY;
Bengaluru and Chennai led overall leasing at 23% share each;
New supply rose 32% YoY pushing vacancy levels up by 40 bps.
Technology and Engineering & Manufacturing sectors together dominated the office leasing activity in Q2 2023 contributing to 47% of the total leasing during the quarter, said the report.
Leasing by Engineering and Manufacturing firms witnessed a three-fold rise YoY, as occupiers continued to take up larger spaces across top markets.
Bengaluru and Chennai were the most preferred locations for engineering and manufacturing companies for their office expansions.
While the share of Technology continued to dip from 40% in Q2 2022 to 26% in Q2 2023 amidst a weak demand scenario, it remained dominant.
At the same time, they continue to blend their real estate portfolio with flex as their core strategy, attracted by the flexibility, agility, and cost-effectiveness that they offer. Leasing by flex space surged 58% YoY during the quarter, as occupiers continued to adopt flex space as a long-term strategy.
“Engineering, manufacturing, BFSI and flex spaces have seen a strong rise in leasing, at 71% rise YoY in Q2 2023,” says Peush Jain, Managing Director, Office services, India, Colliers.
“This signals optimism along with growth in domestic consumption & investment, translating into office space demand. Flex spaces continue to gain larger ground, as occupiers focus on building operational efficiencies through a hybrid and distributed work model.
“The second half of 2023 is starting on a promising note with resurgence in demand across geographies,” it said. Fiinews.com
