The Mumbai office market experienced robust leasing activity in the third quarter, with a gross leasing volume (GLV) of 3.5 million square feet (MSF), marking a 26.9% increase compared to the previous quarter. Mumbai recorded the highest GLV among the top eight cities, contributing to a total leasing volume of 15.1 million square feet in the quarter. Delhi-NCR followed with 3.4 MSF, while Hyderabad and Bengaluru were third and fourth, with 2.4 MSF and 2.2 MSF, respectively. Chennai rounded out the top five contributors with 1.8 MSF. Although the GLV in Q3 was 13% lower than the second quarter, it was consistent with the volume seen in the first quarter of the year, indicating sustained momentum in the sector.
The year-to-date (YTD) total leasing volume stands at 48.2 MSF, and based on the average quarterly run rate, the leasing volume for the entire year of 2023 is projected to approach 64 MSF. Mumbai also exhibited strong net absorption of office space in the quarter, with 1.14 MSF, reflecting robust demand for office spaces in the city.
Key office markets in Mumbai, such as BKC and Lower Parel, have seen consistent demand for fresh office space, while suburban markets like Powai and Malad Goregaon have witnessed increased term renewals activity.
In terms of sectors driving office leasing in Mumbai, the IT-BPM, captive segment, engineering and manufacturing, telecom, and BFSI sectors were the top contributors in Q3FY23. The engineering and manufacturing sector, in particular, experienced a 48% growth in office leasing activity compared to the same period last year.
Delhi-NCR recorded the second-highest GLV of 3.4 MSF in the quarter, with notable growth in leasing by the IT-BPM and BFSI sectors, which saw 56% and 31% year-on-year growth, respectively. Kolkata, despite its smaller market size, demonstrated strong leasing activity in Q3FY23, with a 0.4 MSF GLV, marking an 87.8% quarter-on-quarter growth and nearly 40% year-on-year growth. Net absorption in Kolkata also recorded a healthy 29% growth compared to Q3-22.
Anshul Jain, Head of APAC Tenant Representation and MD, India, and South East Asia, commented on the evolving occupier demands in the office segment. India is becoming a preferred destination for business expansion, particularly in top-tier markets, where demand for Grade-A, compliant, and sustainable office assets is expected to remain strong.
