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The gross absorption of office space reached 14.6 million square feet, a marginal growth of 2 per cent compared to 14.3 million square feet during the same period last year across the top 6 cities during the second quarter of 2023. The technology, engineering, and manufacturing sectors played a dominant role, accounting for 47 per cent of the total leasing space, according to Colliers.
Amidst global economic headwinds, the report stated that demand continued to grow on a sequential basis, indicating continued occupier confidence, with Bengaluru and Chennai leading the demand during Q2 2023, accounting for about half of the total leasing across the top 6 cities.
During this period, leasing by engineering and manufacturing firms stood at 21 per cent, a three-fold rise YoY, as occupiers continued to take up larger spaces across top markets. In terms of location, 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 per cent in Q2 2022 to 26 per cent in Q2 2023 amid 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 per cent 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 a 71 per cent rise YoY in Q2 2023. This signals optimism along with growth in domestic consumption and investment, translating into office space demand. Flex spaces continue to gain 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 a resurgence in demand across geographies,” said Peush Jain, Managing Director, Office services, India, Colliers.
- Also read: Demand for office space is fairly strong in India unlike the global market: Brigade Group MD
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