Bengaluru, Hyderabad, Chennai grab a lion’s share of office leasing market – Mint

Among the top seven cities, Bengaluru, Hyderabad and Chennai saw their share of total office leasing increase to 66% in 2020-21, compared to 47% in 2017-18, according to Anarock Property Consultants.

The net office absorption in the top cities was 21.32 million square feet in 2020-21, with the three southern cities accounting for roughly 14.06 million square feet. The Mumbai Metropolitan Region  or MMR and Pune absorbed 4.56 million square feet, or 21% of overall share. The National Capital Region or NCR took up 2.3 million square feet (11%).

In 2017-19, 31.15 million square feet of office space were leased in the top seven cities. Of this, net absorption in the southern cities collectively accounted for 47%, the western region 33% and the northern region 17%.

In terms of new office supply too, Bengaluru, Chennai and Hyderabad have continued to ramp up their share—from 40% in FY18 to nearly 63% in FY21. Of the total new office space of 40.25 million square feet in FY21 across the top seven cities, the southern cities had a 63% share (about 25.55 million square feet).

The office supply share of the main western markets shrank to 19% in FY21 from 40% in FY18.

“The remarkable growth in the office market of these three southern cities when viewed against their western and northern counterparts is directly attributable to robust demand by the IT/ITeS sector, affordable rentals, and the exponential growth of (local) startups over the past few years. The manufacturing and industrial sectors are also driving demand here,” said Anuj Puri, chairman, Anarock Group.

Between FY18 and FY21, office rentals in each of the southern cities also showed double-digit growth. In this period, office rentals in NCR remained more or less stagnant while MMR and Pune saw just 2% and 8% rental growth respectively.