Connect with us


India office leasing is likely to cross 50 mn sq ft in 2022, says a report by Colliers

October 1, 2022: The year 2022 is likely to emerge as the best year in terms of office space leasing, with absorption likely to cross 50 mn sq feet across the top 6 cities. The spurt in leasing is driven by a spillover in demand from the last two years. Occupiers that were postponing their leasing decisions during 2020 and H1 2021 are now being even more optimistic about leasing space. While hybrid working continues to be the mainstay, occupiers are not shying away from leasing new large spaces.

Trends in Grade A gross absorption (in million sq feet)

Q3 2021Q3 2022YTD 2021YTD 2022Q3 2022 (YoY %)YTD 2022(YoY %)
Pan India10.213.020.640.626%97%

Source: Colliers

Note- YTD : 1st January to 30th September of the year

Gross absorption: does not include lease renewals, pre-commitments and deals where only a letter of Intent has been signed.


The top 6 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune.

Burgeoning office space demand in larger markets

Office absorption has already touched 40.6 mn sq ft during Q1-Q3 2022, a two-fold increase from the same period last year which witnessed lockdowns due to Covid-19. The larger markets of Bengaluru, Delhi-NCR and Mumbai accounted for around 67% of the total absorption, backed by robust demand from Tech and Flex players. Demand in Bengaluru, Delhi-NCR and Chennai has already surpassed the earlier high seen in 2019. Mumbai, Hyderabad and Pune are also inching towards reaching historical levels by the end of the year.

“We are at an exciting stage in the market wherein demand and supply are ramping up. Tech companies and flex operators together accounted for about 50% of the total demand during the first three quarters this year. Vacancy levels lowered during the quarter for the second time in a row by 30 basis points amidst robust office market growth. Moreover, Indian firms both startups and large firms are eyeing office expansions. However, the concerns around recessionary pressures in the global markets continue to look at large and it needs to be seen how they will impact occupiers’ decisions and confidence towards the end of the year. We could see a slight dent in enquiries/demand in the near term“, said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.

Robust growth in new supply led by Bengaluru and Hyderabad

The year also saw greater supply in the market, with new completions rising 1.5X YoY to 32.8 mn sq feet. This gave a thrust to leasing, as many of the buildings had prior pre-commitments. Bengaluru and Hyderabad accounted for 1/4th share each in total supply during the year. 


Trends in Grade A supply (in million sq feet)

Q3 2021Q3 2022YTD 2021YTD 2022Q3 2022(YoY %)YTD 2022(YoY %)
Delhi NCR1.
Pan India9.

Source: Colliers

Note- YTD : 1st January to 30th September of the year

Tech and flex boosting office space demand 

Leading Tech and Flex occupiers leased 19.8 mn sq feet of space during the year, accounting for nearly half of the total leasing across the top 6 cities. Being leading Startup and Tech hubs, Bengaluru and Pune were the most preferred locations for top flex operators for their portfolio expansion. Bengaluru accounted for a 31% share in total flex leasing during YTD2022, followed by Pune at 25% share. Consulting and engineering firms have also been actively leasing spaces across cities, as most of them have returned to office post covid. 


Vacancy levels dipped 30 basis points

Vacancy levels declined on a quarterly basis to 16.7%, led by robust demand amidst limited new building completions. Higher enquiries and pre-commitments are likely to keep vacancy levels rangebound in the next three months. 

Trends in Grade A vacancy levels

Q3 2021Q4 2021Q1 2022Q2 2022Q3 2022
Pan India18.1%18.5%18.5%17.0%16.7%

Source: Colliers“The third quarter has further reinforced the growth momentum set out at the beginning of the year. A consistent stable demand can lead to a meaningful increase in rentals in the coming quarters. Flex space has consistently grown with large occupiers taking space in these centers and this trend is likely to continue,” says Vimal Nadar, Senior Director and Head of Research, Colliers India.