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Q1 2024 off to a strong start; Office leasing surges by 35% YoY to 13.6 msf

Gurgaon, March 23, 2024: The first quarter of 2024 has started on a strong note, registering total leasing of 13.6 million square feet across the top 6 cities, marking a remarkable 35% increase compared to the same period last year. Although this is a significant drop from the record office space take-up in the last quarter of 2023, the remarkable annual increase is indicative of upbeat occupier sentiment, given the fact that the first quarter is typically slower. Bengaluru and Hyderabad emerged as frontrunners for demand of Grade A office space in Q1 2024, cumulatively accounting for more than half of the India leasing activity. The office market of Hyderabad especially demonstrated a strong momentum with 2.2x space uptake in Q1 2024 as compared to the corresponding quarter last year. This demand was driven by Healthcare & Pharma and Technology sectors. Amongst other major office markets, Mumbai too experienced a notable surge in leasing activity, an impressive 90% YoY rise in Q1 2024. 

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

 CityQ1 2024Q1 2023YoY change (%)
Bengaluru43.225%
Hyderabad2.91.3123%
Delhi-NCR2.52.214%
Mumbai1.9190%
Chennai1.51.6-6%
Pune0.80.8
Pan India13.610.135%

Source: Colliers

Note- Q1: 1st January to 30th March of the year

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

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Top 6 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune

During Q1 2024, new supply across top 6 cities remained steady, at 9.8 million square feet, almost at par with the level seen in Q1 2023.  Bengaluru witnessed significant new project completions, contributing to 45% of the total new supply, followed by Hyderabad at 27% share. With demand outpacing supply, average rentals saw up to 8% uptick on a YoY basis across most of the major markets. Vacancy levels, meanwhile, are expected to remain steady, hovering around 17.3% by the end of Q1 2024.

Trends in Grade A new supply (in million sq feet)

 CityQ1 2024Q1 2023 YoY change (%)
Bengaluru4.4411%
Hyderabad2.62.48%
Mumbai10.4150%
Pune10.667%
Delhi-NCR0.51.3-62%
Chennai0.30.8-63%
Pan India9.89.53%

Source: Colliers

Note- Q1: 1st January to 30th March of the year

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Top 6 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune

Technology, Engineering & Manufacturing and BFSI sectors drove space uptake in Q1 2024

During Q1 2024, the demand for office space across the top 6 cities continued to remain broad-based. At 2.8 million square feet, Engineering & manufacturing leasing soared to over 2.3x times in Q1 2024 compared to the first quarter of 2023. Bengaluru accounted for about 55% of the activity in the sector, underscoring occupiers’ continued preference for the market. BFSI and Flex space too continued their healthy space take up across most cities, garnering 14% and 13% share, respectively in overall India leasing for Q1 2024.

Sector-wise Pan India leasing (in msf)

SectorQ1 2024Q1 2023YoY change %
Technology3.22.242%
Engineering & Manufacturing2.81.2128%
BFSI1.91.532%
Flex space1.82.1-13%
Healthcare & Pharma1.20.690%
Consulting1.11.11%
Consumables0.30.219%
E-commerce0.040.2-80%
Others*1.3136%

Source: Colliers

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Note: Others includes Logistics, Media & Telecom etc.

Data pertains to Grade A only

Key deals Q1 2024 Hyderabad 

Occupier/TenantArea leased (sq.ft.)Building NameMicro market
HCL3,20,000Raheja CommerzoneSBD
Tablespace 1,35,000Raheja Mindspace Building No 4SBD
Skootr97,000Raheja CommerzoneSBD

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