Hyderabad tops in leasing activities

Madhapur continues to dominate Grade-A office space leasing
Occupies 76 % share

The Hi-tech city continues to dominate the leasing of space for IT offices. It emerges on to the top in Grade-A office leasing. In the first quarter of 2023, the Hi-Tech City occupies 76 % share of the total leasing activity. However, the new office stock supply continues to remain steady at 2 msf. In the wake of the prior commitments, new office stock supply has come in large part with earlier commitments in the financial district and hi-tech city. As this is likely to increase further in the coming quarters, office space vacancies are set to increase significantly.

This is stated in the report released by Colliers on Office Outlook. If we look at the share of leasing of various cities in the first quarter across the country, Bengaluru occupies the first position with 32 percent, followed by Delhi (22 percent), Chennai (15 percent), Hyderabad (13 percent), Mumbai (10 percent) and Pune (8 percent). With regard to supply of new office space stock, Bengaluru tops the list with 42 percent share, followed by Hyderabad with 25 percent, Delhi (13 percent), Chennai (9 percent), Pune (7 percent) and Mumbai (4 percent).

Grade-A office market on all-India basis in the first quarter is as follows: total stock -667.2 msf of which 16.4 percent space is vacant. The average rent per month is put at Rs.95.1 per sq ft. As far as Hyderabad is concerned, 91.5 million square feet of office is available in first quarter. In all, 2.9 million square feet of space will be available to the city in the second quarter. Commercial space accounts for 8 percent of this, while the remaining 92 percent is going to be occupied by the IT. The office rents range from Rs.35.9 to Rs.77.7 per square foot per month.

Fixed office space

Office space in the country continues to remain constant. The situation in the last quarter of 2022 is continuing in the first quarter of 2023 too. The demand for office space in the first quarter did not have much impact due to the availability of more vacant space. Two years after the Covid, there is a strong demand for office space in 2022 as companies are in the expansionist mode. However, market activity slowed down in Q1 due to recession.. At the same time office space vacancy remained steady due to high new supply. Although leasing activity decline by 19 percent to 10.1 million square feet in Q1 2023, it is expected to pick up sharply later this year.

Pan India Grade-A office space vacancy was put at 18.5 percent in Q1 of last year. The vacancy share reduced to 17 percent in Q2, further down to 16.7 percent in Q3 and slightly decreased to 16.4 percent in Q4. It stood at 16.4 percent in Q1 2023. Colliers India office services MD Piyush Jain stated that office space in Q1 remained the same as in the previous quarter as companies delayed to take a decision on leases amid continued economic uncertainty. If the concerns of recession subside in the second half of 2023, it is believed that strong growth is likely to be seen by the end of this year. While the office vacancy levels in Delhi, Hyderabad and Pune increased marginally, office space vacancies in six major cities of the country in Q1 2023 were approximately the same as in Q4 2022. The Colliers report said that vacancies have also increased in Hyderabad, Delhi and Pune due to a significant increase in supply. Grade-A office space vacancies in Hyderabad were 18.6 per cent in Q4 2022 and 19.9 per cent in Q1 2023.