Office space leasing up 29 per cent to 16.1 million sq ft in Jul-Sep across top eight cities: Knight Frank

New Delhi: Office space leasing increased 29 per cent year-on-year during July-September period to 16.1 million square feet across eight cities on better demand from corporates and coworking players, according to Knight Frank India.

The office market recorded 7-quarter high in leasing volumes in the third quarter of this calendar year, property consultant Knight Frank said in its report 'India Real Estate Update (July-September 2022).

The leasing transaction volumes have surpassed the pre-pandemic quarterly average of 2019 by 6 per cent.

Bengaluru, the largest office market in India, accounted for 45 per cent of the total office space leasing. The absorption of office space in Bengaluru rose 71 per cent to 7.3 million square feet in July-September as against 4.3 per cent in the corresponding period of the previous year.

"The consistent growth in leasing volumes along with stable to growing rents depicts the strength of the office market. Large scale hiring in the last 18 months, especially in the IT/ ITeS sector and companies implement return to office policies is creating incremental office space demand," said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

Pent up demand from 2020–21 is also driving growth in leasing volumes.

Baijal expects annual volumes to match the record levels seen in 2019.

As per the data, the leasing of office space in Delhi-NCR grew 23 per cent to 2.4 million square feet during July-September this year from 2 million square feet in the year-ago period.

Mumbai saw 82 per cent increase in leasing of office space to 2.1 million square feet from 1.2 million square feet, while Chennai witnessed 12 per cent rise in leasing to 1.8 million square feet from 1.6 million square feet.

Office space leasing in Ahmedabad jumped more than two-fold to 0.7 million square feet from 0.3 million square feet. Kolkata too witnessed more than two times increase to 0.3 million square feet from 0.1 million square feet.

However, leasing in Hyderabad fell 60 per cent to 0.8 million square feet from 2.1 million square feet. In Pune, too, leasing of office space was down 27 per cent to 0.7 million square feet in July-September 2022 from 1 million square feet in the corresponding period of the previous year.

The consultant said that, in line with demand, 13 million square feet of new office was completed in July-September, a 9 per cent increase from 11.9 million square feet in the year-ago period.

Bengaluru, with 4.9 million square feet along with Hyderabad with 3.3 million square feet cumulatively constituted 63 per cent of the total space delivered during the period.

From sector-wise transaction split in the third quarter of 2022, Knight Frank said that the 'other services sector' companies were the most active followed by those from the Information Technology (IT) sector accounting for 29 per cent and 23 per cent of the transacted space, respectively.

The share of the co-working sector in total transactions increased to 23 per cent in the third quarter of 2022 from 6 per cent in the same quarter of 2021, recording the maximum increase across all sectors.