Gross leasing in Q1 at an all-time high

• Quarterly gross leasing in Q1 reached a historic high of 3.09 million sq ft, backed by strong pre-commitments. The leasing activity was dominated by flex with 36.9% share, followed closely by BFSI and Tech with respective shares of 32.6% and 20.1%.
• The net absorption for the quarter was recorded at 1.02 mn sq ft, up by 101.3% y-o-y. The eastern part of the SBD submarket witnessed the maximum net absorption, followed by the CBD during the quarter.

Healthy supply addition in Q1; vacancy up 130 bps q-o-q

• New completions of 2.41 million sq ft across four projects were recorded across CBD, SBD and Suburbs.
• The new supply additions in the quarter continued to outpace net absorption, resulting in the city’s overall vacancy rate increasing to 15.6%, up 130 bps from last quarter.

Overall rents up marginally q-o-q

• Overall city level gross rents were up marginally by 1.7% y-oy. At a submarket level and on a y-o-y basis, gross rents in CBD increased the most, while SBD submarket saw lower rents during the quarter on the account of reduced rentals in select projects.
• The capital values rose 0.6% q-o-q and 3.1% y-o-y with yields dropping marginally in the SBD and Suburbs submarkets.

Outlook: New supply and demand on track to reach historic high in 2025

• For 2025, supply is expected to be at record levels of 9-10 million sq ft, primarily in the SBD submarket. Vacancy rates are likely to hold steady at 14.0-14.5% in the near term.
• High pre-commitment levels for 2025 projects, especially in SBD East, will drive net absorption to likely record levels. Tech, flex space providers, and manufacturing/industrial sectors will continue to dominate office space demand in the near term.