India’s office market recovers as office absorption and occupier confidence go back up

Office supply nearly doubled to 14.3 million sq ft

The commercial office sector shows signs of recovery as office absorption across Indian cities is at a two-year high. Gross office absorption has increased almost three times year-on-year (YOY) in Q1 2022 at 13 million square feet.

It started picking up during the second half of 2021 and continues to do so in 2022. 

In a report by BusinessToday, Bengaluru, India’s IT capital, accounted for 31 percent of office absorption in Q1 2022, followed by Pune and Hyderabad, which both accounted for 17 percent of the market.

Office supply, on the other hand, nearly doubled to 14.3 million sq ft. Bengaluru dominated with a share of 29 percent. Chennai and Pune came in second and third, with 22 percent of the total supply respectively.

“This quarter has seen occupier confidence swinging back with considerable large-sized deals that accounted for a whopping 55 percent of the leasing during the quarter. This clearly shows that occupiers are consolidating offices as they prepare for workplace-led innovation and collaboration,” said Ramesh Nair, CEO, India and managing director, Market Development, Asia, Colliers.

The Economic Times reported that India has one of the Asia Pacific region’s largest office markets. Among the top operators in the country are Awfis, CoWrks, Smartworks, Tablespace, and WeWork.

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Naveen Nandwani, MD, Commercial Advisory & Transactions, Savills India and head of Workthere India shared that there has been an influx in the country’s flexible workspaces segment. Moreover, to gain more investments, operators of co-working spaces are constantly improving their strategies

“The flexible market is now dominated by high-quality spaces because occupiers are focussed on cultivating an updated office strategy around a space employees want to be in, and in an environment that enhances their desired culture,” said Griffin Foley, Northeast Lead, Workthere Americas.

Office absorption was dominated by the fast-growing tech sector with a 32 percent share in Q1; flexible workspaces with 15 percent; and consulting and occupiers in the engineering and manufacturing sectors with 12 percent each.

Corporations continue to occupy managed offices, which resulted in flex spaces opening in cities inside and outside the metro.

The Property Report editors wrote this article. For more information, email: [email protected].