Q4 2023 records 20.2 mn sq ft of gross absorption, highest ever quarterly leasing activity
- Bengaluru drives 2023 demand with more than one-fourth share in gross leasing, followed by Delhi NCR & Chennai at around one-fifth share
- Flex space leasing continues to grow, highest leasing in any year at 8.7 mn sq ft,
- Large deals (>100,000 sq ft) accounted for 50% of 2023 demand; Space take-up by GCCs bounce back in Q4
- 50.1 mn sq ft of Grade A supply infusion in 2023 reflects strong developer confidence
- Vacancy remained rangebound while rentals firmed slightly
Gurgaon, India, 24 December 2023: Contrary to initial beliefs, 2023 India office market has culminated on a spectacular note with 58.2 mn sq ft of gross absorption across the top 6 cities. The last quarter of the year witnessed the highest-ever demand for office spaces in India, with all the three southern cities of Bengaluru, Chennai and Hyderabad registering best performance since the Covid-19 pandemic. While Bengaluru and Delhi NCR drove leasing activity during 2023, accounting for about half of the total demand of office space in India, Chennai made it to the top three list for the first time. Furthermore, with more than 2x leasing activity in 2023 as compared to 2022, Chennai breached all earlier highs and recorded 10.5 mn sq ft of gross absorption.
Trends in Grade A gross absorption (in million sq feet)
| City | 2023 | 2022 | YoY change | Share of Q4
in 2023 gross absorption |
| Bengaluru | 15.6 | 16.2 | -4.2% | 35% |
| Delhi-NCR | 11.6 | 10.8 | 7.0% | 27% |
| Chennai | 10.5 | 4.6 | 131.0% | 40% |
| Hyderabad | 8 | 6.5 | 22.7% | 34% |
| Mumbai | 7 | 7.1 | -1.2% | 38% |
| Pune | 5.5 | 5.1 | 8.9% | 36% |
| Pan India | 58.2 | 50.3 | 15.7% | 35% |
Source: Colliers
Note- Gross absorption: does not include lease renewals, pre-commitments and deals where only a letter of Intent has been signed.
Top 6 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune
| Demand (msf) | |||
| Q4 2023 | Q4 2022 | YoY Change | |
| Bengaluru | 5.5 | 3.5 | 58% |
| Chennai | 4.3 | 1 | 338% |
| Delhi NCR | 3.1 | 1.9 | 61% |
| Hyderabad | 2.7 | 1.7 | 57% |
| Mumbai | 2.6 | 1.4 | 87% |
| Pune | 2 | 1 | 100% |
| Pan India | 20.2 | 10.5 | 92% |
Note: Data pertains to Grade A buildings and Pan India includes cities mentioned above only
Top 5 deals- Q4 2023
| Transaction
Quarter |
Year | City | Occupier/Tenant | Industry | Area leased (sq.ft.) | Building Name | Micro market | Location |
| Q4 | 2023 | Chennai | Bank of America | BFSI | 1,100,000 | DLF Downtown | OMR Zone 1 | Taramani |
| Q4 | 2023 | Bengaluru | Philips | Engineering & Manufacturing | 655,681 | Embassy Business Hub | North | Bellary Road |
| Q4 | 2023 | Bengaluru | Wells Fargo | BFSI | 650,000 | Embassy Tech Village – 3B | ORR | ORR 1 |
| Q4 | 2023 | Bengaluru | Qualcomm | Engineering & Manufacturing | 567,404 | Bagmane Capital – Angkor East | ORR | ORR 1 |
| Q4 | 2023 | Chennai | Citi Bank | BFSI | 503,525 | DLF Cybercity | MPR | Manapakkam |
Top 5 deals of 2023
| Transaction
Quarter |
Year | City | Occupier/Tenant | Industry | Area leased (sq.ft.) | Micro market | Location |
| Q4 | 2023 | Chennai | Bank of America | BFSI | 11,00,000 | OMR Zone 1 | Taramani |
| Q2 | 2023 | Chennai | Shell | Engineering & Manufacturing | 6,67,752 | MPR | Porur |
| Q4 | 2023 | Bengaluru | Philips | Engineering & Manufacturing | 6,55,681 | North | Bellary Road |
| Q4 | 2023 | Bengaluru | Wells Fargo | BFSI | 6,50,000 | ORR | ORR 1 |
| Q4 | 2023 | Bengaluru | Qualcomm | Engineering & Manufacturing | 5,67,404 | ORR |
Tech demand rationalizing amidst increasingly heterogeneous office space take-up
The contribution of tech sector in office leasing has been steadily decreasing from around 50% in 2020 to 25% in 2023. While demand emancipating from tech occupiers rationalized, the overall leasing activity continued to diversify. The sectoral contributions from BFSI and Engineering & Manufacturing sectors especially have almost doubled, increasing from 10-12% in 2020 to around 16-20% in 2023. Interestingly, in 2023, leasing by Engineering and Manufacturing players (26% share) surpassed the demand emancipating from Technology firms (22% share) in the tech hub of Bengaluru.
Demand from Flex operators remained unabated; at 8.7 mn sq ft flex spaces uptake in 2023 was 24% higher as compared to 2022. Flex penetration in the Indian office market is expected to rise further in 2024, as developers are likely to adopt core plus flex strategy for decision making.
Demand Drivers 2023
| Sector | Area leased
(mn sq ft) |
YoY change |
| Technology | 14.3 | -15% |
| BFSI | 11.2 | 64% |