Coworking Recorded The Highest Net Office Absorption Growth In FY22, Occupying A 13% Share

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Coworking Recorded The Highest Net Office Absorption Growth In FY22, Occupying A 13% Share


Post-pandemic, it was widely anticipated that coworking would soon be dead. Like many others, this prediction was groundless- "New Normal" has made coworking spaces one of the best options for adopting hybrid models in the office. At about 4%, the manufacturing / industrial sectors registered the second-highest YoY growth in net office absorption in FY22. The share of the IT/ITeS and e-commerce sectors declined by 8% and 6% respectively as compared to FY21. The coworking segment accounted for 13% of the 34.1 million square feet of net office space absorption in  2022 in the top seven cities. Each year, the overall share of coworking increased by 8%

  • The manufacturing / industrial sector had the second-highest net absorption growth rate of about 4% year-on-year, while the IT / IT eS and e-commerce sectors' shares declined 8% and 6% in FY21, respectively.

  • City-wise, Hyderabad surpassed Bengaluru in net office space absorption in FY22

  • Large-scale transactions (> 0.1 million square feet) accounted for almost 50% of office transactions in the top seven cities in FY22, compared to 47% in FY21.

  • Mid-sized occupiers also witnessed a marginal rise of 1% of total office leases in FY22, and smaller deals saw an annual dip of 4%

  • In the top seven cities, a total of 51.2 million square feet of strong new office supply was seen in FY21, with Bangalore, Hyderabad, and Chennai together accounting for 58%.

  • The average monthly office rent in the top 7 cities was ₹76/sf/mo. MMR remains the most expensive office market with INR 126/sf/Mo rentals, followed by Bangalore and NCR.

  • Vacancy rates in the top 7 cities on average increased by 1% from 15% in FY21 to 16% in FY22.due to the completion of expensive new construction.

  • At 28.5%, NCR has the highest office space vacancy amongst the top 7 cities, followed by Kolkata and MMR at 23.5% and 15.75% respectively.

  • Pune is the only city where the office space vacancy rate is hovering in the single-digit at 8.5%.

Mid and large-scale transactions were prominent in the current fiscal year as occupiers are optimizing their portfolios. The new realities include bringing employees back to the workspace, increased assessment of new leases, and an improving hiring scenario.

The top 7 cities witnessed strong new office supply in FY22, aggregating to 51.2 msf – thus rising by 27% against FY21. The southern cities of Bengaluru, Hyderabad, and Chennai dominated new completions with a total of 58% share (approx. 29.85 msf).

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