The number of offices that were leased in 9 cities grew by 33 percent during the July-September quarter compared to the same period a year earlier when more businesses reverted their policies on working from home and required workers to go to work.

Companies lease 15.8 million square feet in the quarter, as per an analysis by CBRE. This is an increase of 17 percent over the prior quarter.

The banking, financial services, and insurance (BFSI) firms made up 29 percent of all leases. The majority of transactions were conducted in Mumbai, Bengaluru, and Hyderabad, CBRE said.

The proportion of space used by BFSI companies increased to 29 percent, up from 16 percent in April and June, fueled by major deals with global capability centers, as well as Indian insurance companies and banks increasing their presence in the report titled CBRE India Office Figures Q3 2023.

The nine cities that CBRE covers include Bengaluru, Mumbai, Hyderabad, and the National Capital Region, comprising Delhi, Chennai, Pune, Kolkata, Kochi, and Ahmedabad.

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Office Space Supply

Technology firms had 23 percent of space leased. This was followed by manufacturing and engineering companies (10 percent), life science firms (10 percent), companies that operate in flexible areas (8 percent), and research analysis, consulting, and research companies (7.7 percent). US and Canadian companies were able to claim 42 percent, according to the report.

Office space in the nine cities jumped to 19.3 million square. feet in the period, with an increase of 94 percent year-over-year.

Bengaluru, Hyderabad, and Pune were the top three cities for new completions in the quarter, with a 77 % share. The non-SEZ segment remained at the forefront of completions for development, increasing its percentage to 95 percent, up from 75 percent during the previous month (April-June).

The report states that more than 50% (53 percent) of the projects completed were green-certified and earned green certifications like LEED and IGBC that highlight the ongoing sustainable dedication of developers.

Small-sized (less than 10,000 square. feet) or medium-sized (10,000-50,000 square feet) transactions were the most prominent in the quarter, with a market percentage of 86 percent, which was mostly stable on an annual basis.

The percentage of deals that are large (more than 100,000 square. feet) was up to 7 percent, up from 6 percent the last quarter. Bengaluru and Hyderabad led the way in big-ticket deals in the quarter, with Chennai as well as the NCR following in their footsteps. Pune also recorded other similar transactions along with Mumbai.

“India’s office sector has outperformed expectations this year… While the office sector in 2023 is likely to perform better than predicted at the beginning of the year, India has demonstrated resilience in the face of global economic challenges and remains one of the most attractive destinations for global corporations establishing their global capability centres,” said Anshuman Magazine, chairman and CEO CBRE, chairman and CEO – India, South-East Asia, Middle East & Africa, CBRE.

Bengaluru, followed by NCR, Chennai, and Hyderabad, are likely to accelerate absorption by 2023, While Mumbai, Pune, and Kolkata will likely see an increase in space use throughout the year, he added.

“Moreover, global and domestic technology firms and consulting companies are exploring opportunities in select tier-II markets, drawn by improved infrastructure, a skilled talent pool, and attractive rental options,” He added.

The workplace is undergoing a multi-faceted strategy that includes optimal strategies, and return-to-office programs are taking off, characterized by the desire to design environments that are engaging and cater to employees of all ages, according to Ram Chandnani, managing director of advisory and transaction Services, CBRE India.

“This year, we anticipate a surge in investments in workplace technology, improved coordination across functions, and a heightened emphasis on transforming workspaces,” he added.

The demand for flexible office spaces is on the rise as an increasing number of owners state their intention to dedicate over 10 percent of their portfolio to flexible office solutions. Flexible workplaces are designed to offer people and teams various ways of working based on their requirements.