Mumbai office leasing volume hits 3-year high of 6.39msf in H1

Gross leasing volume was at 2.99msf in Q2 alone.

Gross office leasing volumes in Mumbai dropped 12% q-o-q but jumped 106% y-o-y to 2.99 million square feet (msf) in the second quarter of the year.

“This brings the 2022 first-half value of GLV to 6.39 msf, 22-50% higher than the first half figures recorded during the same periods over the last three years,” says Cushman & Wakefield.

Here’s more from Cushman & Wakefield:

Fresh leasing of 1.69 msf continues to drive quarterly GLV numbers, and about 1.3 msf of term renewals were recorded. SBD-BKC, Andheri-Kurla, Malad-Goregaon, and Central Suburbs were active submarkets during this quarter with a cumulative share of 60% in total leasing volume. BFSI (27%), Engineering & Manufacturing (20%), and IT-BPM (18%) were active sectors during the quarter. 

With strong leasing activity, city-level vacancies have marginally decreased by 50 bps to 23.3% compared to the previous quarter. This can be attributed also to the lack of new project completions during the quarter besides higher uptake seen in existing stock. Majority of the sub-markets witnessed an average 19 bps drop in vacancy. With the quarter’s net absorption recorded at 0.77 msf, the overall H1 2022 net absorption figure stood 1.37 msf. Leasing is expected to remain strong as more and more companies look to bring back employees to work at a faster pace. 

H1 2022 receives limited new completions 

The second quarter did not see project completions. As of H1 2022, a cumulative of 1.63 msf got completed, while the first half-year of new completion for years 2020 and 2021 were 2.5 msf and 3.2 msf respectively. We expect an additional supply of 14.16 msf up to 2024, of which about 1.86 msf of supply is expected in the second half of the current year. The majority of this supply (H2 2022-2024) is expected at Andheri-Kurla and Thane-Belapur Road markets. 

Improvement in rental values across key sub-markets 

Healthy leasing over the first half of this year with limited new supply in the market has induced an uptick in the overall city rentals. Prime sub-markets such as SBD-BKC, and Lower Parel have witnessed rental improvements backed by strong demand. With a positive outlook on leasing activity in the market, the quoted rental values are expected to improve in upcoming quarters.