Net absorption up 17% y-o-y

• Gross leasing in the city reached 1.7 million sq ft, marking a 30% q-o-q increase. This growth, driven by expansion-related space take-up, continues to propel the office market towards healthy numbers.
• Demand was driven by Telecom, Healthcare-Biotech, Real Estate & Construction occupiers with 29.1%, followed by IT with 21.7% and consulting firms with 17%. Net absorption was down q-o-q but showed a 17% increase y-o-y, with the SBD accounting for 54% of the Q3 net absorption numbers.

Completions in Q3 total 0.9 million sq ft

• Three new projects, Gateway Office Park A3, The Wings and Elcot Sholinganallur SEZ in PBD GST, SBD and PBD OMR, respectively, were completed in Q3, collectively adding 0.9 million sq ft to the city’s office Grade A stock.
• In total, we expect around 3.8 million sq ft of supply in 2024, of which 55% has already come on stream. The city’s vacancy declined by 20 bps q-o-q to 9.4%, the lowest in 16 quarters.

Rents and capital values on the rise

• Rents, on an overall basis, rose by 1.6% q-o-q, nearly at the same pace as the previous quarter. The highest rent growth was seen in SBD OMR, where, despite the increase in vacancy, the submarket saw a 3.7% q-o-q increase in rents.
• Capital values kept pace with rent growth, increasing by 1.2% q-o-q and 5.9% on a y-o-y basis.

Outlook: Robust demand and quality supply set to transform key submarkets

• Strong demand, existing pre-commitments and ongoing deals are expected to drive robust net absorption over the next 12 months, primarily led by occupiers in the IT, flex, manufacturing and BFSI sectors.
• Around 7 million sq ft of supply is expected over the next 12–18 months, with PBD OMR and SBD submarkets accounting for over two-thirds of it. SBD and SBD OMR will remain office hotspots, while PBD OMR is set to attract more demand due to quality supply.