Office Space, Retail Realty Come Out of Pandemic in 2023

Chennai: Office leasing in top cities touched a four-year high and completion of development saw all-time high in 2023 as the sector came out of the pandemic. New supply of retail space in shopping malls increased 72 per cent and 11 malls became operational in the year.

According to CBRE, the office sector witnessed a gross absorption of 61.6 mn. sq. ft. during 2023 across 9 cities, registering a growth of 7 per cent and marking a four-year high leasing activity after it touched the peak in 2019 with 65 mn. sq. ft.

Bangalore, Hyderabad, and Chennai accounted for nearly 57 per cent of the yearly leasing activity. BFSI firms drove leasing with a share of 22 per cent, followed by technology companies 21 per cent, engineering and manufacturing companies 15 per cent, and flexible space operators 14 per cent. Oct-Dec’23 period sees highest-ever quarterly office leasing at 19 mn. sq. ft.

Meanwhile, completion of office space projects increased by about 13 per cent to reach 56.7 million sq. ft., an all-time high during 2023.

In 2024, office sector demand is expected to be led by Bangalore, followed by Delhi-NCR and Hyderabad, Chennai, and Pune. BFSI, technology, and engineering and manufacturing are likely to continue expanding their GCC services.

The new supply of retail space in shopping malls also increased 72 per cent last year to 59.48 lakh square feet across eight major cities, making 11 shopping malls operational in 2023, according to Cushman & Wakefield. In 2022, nine malls, totalling 34.49 lakh square feet area, had become operational.

In 2023 Hyderabad witnessed the completion of three shopping malls, while Pune and Chennai had two each. One shopping mall each came up in Mumbai Metropolitan Region, Delhi-NCR, Bengaluru and Ahmedabad. The year 2023 saw the biggest supply addition after the pandemic.

“This reflects the strong interest from retailers in entering or expanding into the Indian market, fuelled by evolving consumer preferences, shifting consumption patterns and a supportive business environment,” said Saurabh Shatdal, Managing Director, Capital Markets and Head of Retail at India, C&W.