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BENGALURU : The top six cities of India clocked 10.3 million sq. ft of gross office space absorption in the July-September period, the highest leasing volume since January-March 2020.

Following the second wave in the June quarter, overall absorption rose by 89% quarter-on-quarter as occupiers planned for a gradual re-entry and closed deals that were on hold, leveraging tenant favourable market dynamics, said a note by property advisory Colliers . Cities such as Hyderabad, Bengaluru and Pune, which are driven by the IT sector, accounted for 62% of gross absorption in the September quarter.

With the increased number of fully vaccinated employees returning to their workplaces coupled with fewer restrictions on mobility, the office market is showing signs of a revival, Colliers said.

“The quarter has brought in much-needed cheer for the market. Large deals made a comeback, led by demand from flexible workspace operators. Decision-making by occupiers has become quicker than in 2020. We can expect the optimism to strengthen over the upcoming quarters, provided there is no third wave. Occupiers who were exploring renewal options have begun looking for fresh space," said Ramesh Nair, CEO, India and managing director, market development, Asia, Colliers.

After an average performance in the June quarter, Hyderabad emerged as one of the most resilient markets in terms of demand-supply dynamics. For the first time, Hyderabad had the maximum share in leasing volume at 2.5 million sq. ft, surpassing Bengaluru, as occupiers focused on large block deals and even leasing entire buildings.

Banking and financial services companies and flexible workplace sectors had the maximum share in leasing volume, accounting for 66% of the total demand in Hyderabad. Rai Durg saw the maximum leasing traction, accounting for 53% of the demand, while Hitec City contributed 40%. On a year-to-date basis, Bengaluru continues to be the market leader. Leasing share by flexible workspace operators also rose in the September quarter owing to high demand from occupiers looking for managed spaces and short-term leases to tide over uncertain times. Share of flexible workspaces in leasing increased to 26% during the period. Leading flexible workspace operators focused on signing large block deals exceeding 100,000 sq. ft in almost all major cities seeing increased interest from corporates for managed spaces. Pune accounted for the highest share in flexible workspace, followed by Hyderabad.

The quarter also saw the highest supply since April-June 2020, at 10.8 million sq. feet, in Q3 2021. Hyderabad and Pune contributed the maximum share at 29% and 25% respectively.

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