India’s office market recorded stable performance during Q1 CY’23. Grade A and A+ office stock crossed the 700 msf milestone across the top six cities. Demand and supply levels remained balanced during the quarter. Bengaluru and MMR continued to lead office leasing activity nationwide. Rental growth also strengthened despite global economic uncertainty.
According to the quarterly report by CREDAI National and CRE Matrix, India’s Grade A office stock reached 701.6 msf during Q1 CY’23. Office demand stood at 8.6 msf, while supply reached 8.7 msf during the quarter. Weighted average market rent increased to ₹92 per sq ft per month. Vacancy across the top six cities stood at 16.7% during the same period.
Bengaluru and MMR Led India Office Demand
Bengaluru and MMR remained the top office markets during Q1 CY’23. Together, both cities contributed 55% of India’s total office demand. These markets also contributed 53% of the country’s total office supply. Strong occupier demand continued to support leasing activity across major business districts. Several companies expanded operations despite global market challenges.
The report highlighted strong demand from IT/ITeS, BFSI, and co-working operators. These three sectors continued to drive office leasing across India. IT/ITeS contributed 30% of office demand during Q1 CY’23. BFSI accounted for 16% of total demand during the quarter. Co-working operators contributed another 10% to office leasing activity.
Bengaluru Office Market Recorded Strong Leasing Activity
Bengaluru emerged as India’s strongest office leasing market during Q1 CY’23. Office demand in the city reached 2.8 msf during the quarter. Supply in Bengaluru stood at 1.2 msf during the same period. The city reported a healthy demand-to-supply ratio of 2.3x. Vacancy levels also declined to 7.2% during Q1 CY’23.
The Bengaluru office market continued to attract major occupiers from the technology sector. Google leased 690,051 sq ft at Bagmane World Technology Center during the quarter. Reliance also leased 571,447 sq ft at IBC Knowledge Park. Symbol Technologies signed a lease for 247,786 sq ft at Bagmane Solarium City Business Park. These transactions highlighted continued occupier confidence in Bengaluru’s office market.
MMR Office Market Maintained Healthy Demand
The MMR office market also recorded strong leasing activity during Q1 CY’23. Office demand in the region stood at 1.9 msf during the quarter. New office supply in MMR reached 1.3 msf during the same period. The market reported a demand-to-supply ratio of 1.5x. Vacancy levels in the region improved to 19.4% during Q1 CY’23.
BFSI companies continued to dominate office leasing activity across MMR. BFSI accounted for 29% of total office occupancy during the quarter. IT/ITeS firms contributed another 23% to office demand. Several major transactions also supported market activity across business districts. UpGrad Education leased 121,166 sq ft at Sunteck BKC 51 during Q1 CY’23.
Piramal Finance leased 126,674 sq ft at Agastya Corporate Park during the quarter. Pidilite Industries also leased 109,496 sq ft at Opus Prime. Tablespace leased 79,611 sq ft at Gigaplex in Airoli West. These deals reflected steady occupier demand across the MMR office market.
Co-Working Sector Reached 50 msf Milestone
India’s co-working sector achieved another major milestone during Q1 CY’23. Total co-working inventory across India crossed the 50 msf mark during the quarter. Flexible office operators contributed around 7% to India’s total office inventory. The segment also accounted for 10% of office demand in Q1 CY’23.
The report noted strong expansion activity from co-working operators across major cities. Flexible office demand increased due to hybrid work strategies and cost flexibility. Several occupiers preferred managed office spaces for faster expansion plans. Co-working operators also expanded aggressively across Bengaluru, MMR, and Pune. This trend continued to strengthen India’s flexible office market.
Office Rentals Continued to Increase Across India
India’s office rentals continued to rise during Q1 CY’23. Weighted average market rent increased to ₹92 per sq ft per month nationwide. The report stated that market rents increased by 5% over the previous quarter. Rental growth reflected strong occupier demand across major office markets. Several landlords also maintained pricing strength in premium office districts.
MMR recorded a weighted average market rent of ₹129 per sq ft per month during Q1 CY’23. Bengaluru reported an average market rent of ₹85 per sq ft per month. Pune office market rentals stood at ₹79 per sq ft per month during the quarter. Chennai recorded market rent of ₹74 per sq ft per month during Q1 CY’23.
India Office Market Outlook Remains Positive
India’s office market entered 2023 with stable leasing activity and healthy rental growth. Demand continued to match supply despite global economic uncertainty. Bengaluru and MMR remained the strongest office markets during the quarter. Co-working operators and large occupiers also supported overall leasing momentum. The market continued to benefit from India’s strong talent base and cost advantages.
The report expects India’s office leasing demand to exceed 45 msf during 2023. Bengaluru and MMR are likely to continue leading office demand across the country. Vacancy levels may improve further in high-demand office corridors. Strong expansion activity from IT/ITeS, BFSI, and co-working operators may support future growth. Overall, India’s office market outlook remains positive for the coming quarters.
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