Vacancy levels of office spaces remained stable at 16.4 per cent during January-March across six major cities compared to the previous quarter with new supply being in line with current demand, according to Colliers.
While Delhi-NCR, Pune and Hyderabad saw an increase in vacancy levels, Chennai witnessed a sharp decline.
The vacancy levels of office space in Mumbai and Bengaluru remained by and large stable, the data showed.
Real estate consultant Colliers India noted that new supply largely treaded alongside demand in most of the markets, resulting in stable vacancy levels.
"At a time when occupiers are delaying decision-making on leasing office spaces amidst continued economic uncertainties, the office market witnessed signs of stability in Q1 2023 with the vacancy levels remaining intact at 16.4% compared to the previous quarter," said Peush Jain, Managing Director, Office services, India, Colliers.
Going ahead, Jain expected demand and supply to move in unison, keeping the vacancy and rental levels rangebound.
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"The latter part of 2023 may see signs of strong recovery provided the recessionary concerns lessen in the beginning of the second half of 2023, he said.
Among six cities, vacancy level of office spaces in Grade-A buildings rose in Bengaluru to 12.8 per cent in January-March from 12.7 per cent in the previous quarter. In Chennai, it dropped to 16.6 per cent from 19.9 per cent.
Office vacancy in Delhi-NCR increased to 20 per cent from 19.6 per cent. Hyderabad saw an increase in vacancy levels to 19.9 per cent from 18.6 per cent. In Mumbai, the vacancy remained flat at 15.3 per cent.
Vacancy of office space in Pune rose to 16.7 per cent in the first quarter of this year from 16.2 per cent in October-December 2022.
Earlier this month, Colliers India released data on the office market, which showed that the gross leasing fell to 10.1 million square feet in January-March from 12.5 million square feet in the corresponding period of the previous year.
New supply declined 34 per cent during January-March to 9.5 million square feet from 14.4 million square feet in the year-ago period. Though the leasing activity in Q1 2023 was subdued, Colliers expects that the market is likely to pick up in the latter part of the year, driven by strong growth fundamentals.
"While the office market has a strong supply pipeline, developers will be more careful & cautious basis how the demand pans out going ahead, thereby avoiding speculative supply," it added.
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