Mumbai office vacancy rate hits record lows in Q1

Vacancy dropped to 11.9% during the quarter.

According to a JLL report, the first quarter saw 0.5 million sq ft of office supply completed across Mumbai’s SBD BKC and SBD North sub-markets. No pre-commitments were recorded in the new completions.

“At 11.9%, vacancy hit a historic low for the city’s office market. With strong net absorption, vacancy dropped 60 bps q-o-q,” the report said.

Here’s more from JLL:

Gross leasing of 2.7 million sq ft was up 28.4% y-o-y and driven by domestic occupiers, with the BFSI segment exhibiting its strongest space take-up in a quarter and contributing 54% to the quarterly leasing.

Quarterly net absorption reached 1.39 million sq ft, propelled by robust demand in SBD North, Western Suburbs and SBD Central. Key transactions include HDFC’s lease in SBD North and BlackRock’s lease in the Western Suburbs, notable for their size in these submarkets.

Rent growth at 6.08% y-o-y

Overall rents have risen by 6.08% y-o-y, with growth across core markets and demand corridors. On a q-o-q basis, Navi Mumbai, Western Suburbs and SBD BKC saw the highest quarterly growth.

Capital values increased in line with rent growth, keeping the market attractive for investors seeking both capital appreciation and rental income gains.

Outlook: Office market poised for growth with BFSI, consulting and flex operators leading the charge

The office market outlook remains positive, driven by strong demand from BFSI, consultancy businesses and flex operators. We expect healthy space take-up in the near-term. Vacancy rates are likely to be in a similar range as seen in 2024.

Despite a healthy supply pipeline, net absorption forecasts are expected to keep vacancy range-bound. Occupiers to seek flexible strategies, blending prime and cost-effective locations with varied lease structures for optimised expenses, adaptability and evolving needs.