Mumbai gross office leasing volume hits record highs in Q3

Leasing volume grew 41% to 4.23m sq ft during the quarter.

Mumbai witnessed highest gross leasing volume (GLV) in recent history of 4.23 msf in Q3, a growth of 41% q-o-q and 34% y-o-y, according to a report from Cushman and Wakefield. 

Driving the quarterly GLV numbers are fresh leases which hit a record 2.45 msf as well as term renewals of 1.46 msf.

Here’s more from Cushman and Wakefield:

This quarter witnessed large (100,000+ sf) fresh leases in submarkets such as Thane, Central Suburbs and Thane Belapur Road, and term renewal deals in SBD-BKC, Malad Goregaon and Thane Belapur Road. 

In terms of overall leasing activity, SBD-BKC, MaladGoregaon, Andheri Kurla and Central Suburbs were active submarkets during the quarter with a cumulative share of over 60% in total leasing volume. BFSI (31%), Professional Services (16%), and IT-BPM (12%) were the most active sectors during the quarter. 

In terms of net absorption, the quarterly number stood at 0.68 msf, a 13% decline on a q-o-q basis but a 2.4x jump as compared to Q3 2021, indicating improvement office occupancies over a mid term as organisations bring back a larger proportion of their employees to offices. 

Supply added in Q3 in Lower Parel and Navi Mumbai 

In Q3, project completions of nearly 1.49 msf was witnessed and a major proportion of the supply was added in Lower Parel, Thane Belapur Road and Powai sub markets. We expect an additional supply of 12.81 msf up to 2024 of which only 0.52 msf is expected in the last quarter of this year. 

The majority of this supply (Q4 2022-2024) is expected at Andheri-Kurla, Thane-Belapur Road and Malad Goregaon submarkets. Projects completed during the quarter marginally increased the overall vacancy rate by 10 bps to 23.24%. 

Improvement in rental values across key sub-markets 

Healthy demand in the market has induced an quarterly uptick up to 1% in the overall city wide rentals. Prominent office buildings in prime sub-markets of SBD-BKC, and Lower Parel have witnessed rental improvements backed by strong demand. The quoted rental values are expected to improve in the upcoming quarters on the back of improving market sentiments and strong growth in office space uptake.