Office leasing hits record levels in India, Mumbai ranks on top

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With an increasing number of firms asking their employees to return to office, activity around leasing office spaces across nine Indian cities has jumped 33% on a Y-o-Y basis. The CBRE report noted that between July and September 2023, the total area leased out for official purposes touched 15.8 million sq. ft. 

Says Subodh Runwal, MD, Runwal Group, “Demand-wise, our experience has been great with affordable segments in micro markets within Mumbai. We have managed to sell 10,000+ units within three years and are witnessing continued demand for the same.” 

Mumbai saw the highest demand amongst all cities, with about 3.2 million sq. ft. office space leased between July-September, 2023. The city alone made up for 20% of total leasing activity across the 8 cities surveyed across India. Together with Bengaluru and Hyderabad, Mumbai accounted for 60% of all office space absorption during the previous quarter. 

The maximum demand (63%) was generated by companies in the BFSI (Banking, financial services and insurance) space, followed by those in technology (10%) and manufacturing (8%).

In tandem with demand, supply also rose by a stupendous 94% on an Y-o-Y basis, touching 19.3 million sq. ft during the quarter. Pune, Bangalore and Hyderabad emerged as key players adding to this supply, constituting a staggering 77% to the total supply. 

The activity was largely dominated by small (area less than 10,000 sq. ft) and medium (between 10,000-50,000 sq. ft), constituting 86% of the total spaces leased. The demand for large spaces i.e. whose total area exceeds 1,00,000 sq. ft. saw a negligible rise in its quarterly demand, inching up to 7% from 6% previously. 

According to the report, Mumbai is the most expensive office market in the country with an average transacted rent of  Rs 113.3 sq ft/month after recording a growth of 3% YOY during the quarter. During July-September 2023, quoted rentals also saw a significant hike, depending on the city. While Mumbai and Navi Mumbai’s quoted rentals rose between 3-6%, rents for spaces in Delhi and Gurgaon jumped up to 3%. Demanded rental prices in both Kolkata and Pune also saw an increase of up to 4%.