Hyd among top 3 cities in office space absorption
Leasing increased by 261% Y-o-Y in Q2 FY’24; Life sciences firms drove absorption with 30% share
image for illustrative purpose
Hyderabad stood among the top three cities dominating office space absorption by recording a 261 per cent Y-o-Y increase in leasing activities at 3.1 million sq ft in July-September of FY 2023-24, as per real estate consulting firm CBRE South Asia Pvt Ltd’s latest report ‘CBRE India Office Figures Q3 2023’.
According to the report, life sciences firms drove the office space absorption with 30 per cent share while the banking, financial services and insurance (BFSI) and technology firms constitute 29 per cent of total leasing during the quarter.
The key transactions recorded in the city during Q2’24 include Bristol Myers Squibb leased 3 lakh sq ft in International Tech Park Hyderabad (ITPH) - Block A, The Executive Centre leased 30,000 sq ft in Nexity (Tower 30)and Pinnacle Reliability leased 20,000 sq ft in My Home Twitza.
The report further highlighted that Hyderabad office space absorption was driven by small-sized (less than 50,000 sq ft) deals. Furthermore, 74 per cent absorption share was recorded in the IT segment, 14 per cent share in the non-IT segment.
On a pan-India basis, office leasing activity across nine major cities increased by 33 per cent Y-o-Y and touched 15.8 million sq ft during Q2 period. The share of BFSI firms constituted 29 per cent of total leasing. Mumbai, Bengaluru and Hyderabad dominated the absorption in this period, collectively accounting for about 60 per cent of the transaction activity.
During the quarter, leasing activity was also driven by technology companies, comprising a 23 per cent share, followed by engineering and manufacturing companies (10 per cent), life sciences firms (10 per cent), flexible space operators (8 per cent), and research, consulting, and analytics firms (7 per cent). American and domestic firms equally lead the absorption in Q2 with a share of 42 per cent each.
In this period, the total office space supply across nine cities surged to 19.3 million sq ft, recording a 94 per cent Y-o-Y increase. Bengaluru, Hyderabad and Pune dominated new completions with a share of 77 per cent. The non-SEZ sector remained at the forefront of development completions in the quarter, increasing its share from 75 per cent in the previous quarter to 95 per cent.
The ongoing sustainability commitment of developers, over half (53 per cent) of the completed projects in Q2 FY’24 period were green-compliant and received green certifications, such as LEED or IGBC. Small-sized (less than 10,000 sq ft) to medium-sized (10,000 – 50,000 sq ft) transactions drove office space take-up with a share of 86 per cent, which was largely stable on a quarterly basis.
The share of large-sized deals (more than 100,000 sq ft) saw a slight uptick, from 6 per cent in the previous quarter to 7 per cent in the Q2. Bengaluru and Hyderabad took the lead in large-sized deal closures during the quarter, with Chennai and Delhi-NCR following suit. A few other such transactions were also reported in Pune and Mumbai.
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, “India's office sector has outperformed expectations this year with sustained absorption, driven by optimistic occupier sentiment and a surge in inquiries. While the office sector in 2023 is likely to perform better than predicted at the beginning of the year, India has demonstrated resilience in the face of global economic challenges and remains one of the most attractive destinations for global corporations establishing their global capability centres (GCCs). Simultaneously, domestic companies, particularly in sectors such as BFSI and engineering & manufacturing, are displaying an increasing appetite for office spaces in major cities”.
