Bengaluru dominates office space absorption, Chennai surprises with 2x growth: Colliers India Report

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Bengaluru dominated office space absorption, but Chennai surprised everyone with over 2x growth and a record 10.5 million sq ft uptake, landing it in the top 3 for the first time, according to a report by Colliers India. Additionally, Bengaluru, Chennai, and Hyderabad registered the best performance since the COVID-19 pandemic. "Indian commercial real estate and office markets will continue to witness steady interest from domestic as well as foreign-origin occupiers.

Increased preference for a combination of core and flex real estate space, heightened activity in tier II markets, and next-gen offices with more sustainable elements will be the key themes for office markets in 2024." said, Arpit Mehrotra, Managing Director, Head of Office services, Colliers India. Meanwhile, tech's contribution shrank by half, from 50 per cent in 2020 to 25 per cent in 2023, but overall demand held strong thanks to diversification. The sectoral contributions from BFSI and Engineering and manufacturing sectors especially have almost doubled, increasing from 10-12 per cent in 2020 to around 16-20 per cent in 2023.

Interestingly, in 2023, leasing by Engineering and Manufacturing players (26 per cent share) surpassed the demand emancipating from Technology firms (22 per cent share) in the tech hub of Bengaluru. Demand from Flex operators remained unabated; at 8.7 mn sq ft, the flex spaces uptake in 2023 was 24 per cent higher than in 2022. Flex penetration in the Indian office market is expected to rise further in 2024, as developers are likely to adopt a core plus flex strategy for decision-making.