IT development increases share of southern cities in office leasing to 66% in FY11

According to Anarock Property Consultants, the top seven cities with a net absorption of 21.32 million square feet (MSF) in FY21, Bengaluru, Chennai and Hyderabad accounted for 66%, followed by West (MMR and Pune) at 21% and North (NCR) with 11%.

In FY18, 31.15 million sq ft of office space was leased in the top seven cities. Of this net absorption, the southern cities collectively account for 47%, the western region 33% and the northern region 17%.

Even in terms of new office supplies, southern cities continued to grow their share – from 40% in FY18 to about 63% in FY21. Of the total new office space completion of 40.25 million sq ft in the top 7 cities in FY11, southern cities accounted for 63% (approximately 25.55 million sq ft). The office supply share of the main western markets declined to just 19% in FY21 (from 40% in FY18.)

Anuj Puri, President – ANAROCK Group says, “Significant growth in the office market of these three southern cities when viewed against their western and northern counterparts is directly due to strong demand from IT/ITES sector, affordable rentals and exponential growth. The number of start-ups at the local level in the last few years. Manufacturing and industrial sectors are also increasing the demand here.”

Notably, between FY18 and FY21, each of the southern cities also witnessed double-digit growth in office rentals. Over this period, office rents in the NCR remained more or less constant, while MMR and Pune saw rental growth of 2% and 8% respectively, showed Anarock research.