Mumbai sees record high quarterly office leasing volume in Q4

Gross leasing volume hit over 5msf during the quarter.

In Q4 of 2023, Mumbai recorded gross office leasing volume (GLV) of about 5.2 msf, 54% higher than the previous quarter and about 16% higher than the same period last year. This is the highest quarterly leasing witnessed in recent years. 

According to a report by Cushman and Wakefield, fresh leasing activity, particularly in sub-markets like Central Suburbs and Lower Parel, drove quarterly GLV with a 60% share. Submarkets like Malad Goregaon (19.5%), Central Suburbs (17.1%) and Andheri Kurla (11.8%) dominated Q4 leasing volume. 

BFSI (25%) and Professional Services (21%) remain major contributors to the quarterly GLV in sector-wise share. Quarterly net absorption was recorded at 2.3 msf, a 1.2x growth on a q-o-q basis and a slight dip of 9% from healthy activity in Q4-22. 

Here’s more from Cushman and Wakefield:

Full year 2023 recorded nearly 14.2 msf of GLV, which is a mere 6% drop from a strong annual nos. seen in the previous year. Fresh Lease continued to dominate with a 51% share in annual leasing volume, largely driven by submarkets like Central Suburbs and Lower Parel with 14% and 13.5% shares, respectively. 

Annual net absorption numbers stood at 4.5 msf, which is broadly in line with the 4.7 msf witnessed in 2022. This is attributed to strong growth in fresh leasing activity, largely witnessed in the second half of the year 2023. 

Supply constraints in the city results in vacancy dropping sharply 

With project completions of about 1.03 msf witnessed this quarter, the annual supply for 2023 is recorded at 2.04 msf. This is a 44% further drop from the historic low supply witnessed last year, indicating the continuation of a new supply-deprived city office market in 2023. 

This current sluggishness in the supply will be somewhat abridged with a healthy supply pipeline for 2024 and 2025, largely concentrated in submarkets like Andheri Kurla, Central Suburbs, and Navi Mumbai submarkets. Due to limited supply entering the market amidst strong demand, the vacancy rate has dropped by 195 basis points during the last four quarters to 18.45%. 

City rentals rise in prominent submarkets 

City-wide market rentals have seen a slight uptick of 1.3% q-o-q, and 3.5% y-o-y. Submarkets such as Worli, Lower Parel and Malad Goregaon witnessed relatively stronger growth over the last year as there was increased leasing activity in the superior-grade assets. With a healthy demand outlook and a drop in vacancy, the city rentals may improve further in key sub-markets.