Hyderabad has highest Grade A office vacancy among 4 cities

HYDERABAD: Even as a buoyant IT/ITeS sector has helped rein in vacancy levels of Grade A office space in India’s top four IT hubs of Hyderabad, Bengaluru, Chennai and Pune, Hyderabad has emerged as the city with the highest vacancy levels among the IT hubs, a report by real estate consultancy firm ANAROCK said.
This even as markets such as Delhi NCR, Mumbai Metropolitan Region (MMR) and Kolkata have recorded over 16% office vacancies despite significant office demand coming from non-IT sectors such as BFSI as well as manufacturing and industrial sector.

According to ANAROCK, though Bengaluru has the highest Grade-A office stock of around 168 million sq ft (msft) it has office space vacancy of only about 11.25%, even has Hyderabad has the highest vacancy levels of 15% (among the four IT/ITeS hubs) though it has a lower about 80 msft.
On the other hand, Pune, which has 60 msft of office stock, currently has the lowest vacancy levels of 8.5%, while Chennai, which has around 55msft of Grade A stock available, has vacancy levels of 10.35%.
ANAROCK attributed this to many large and mid-sized occupiers continuing or renewing their leases during the pandemic because their business either saw no major impact or even grew during Covid-19.
“The cost of re-establishing or taking up new office space is costlier than holding on to existing leased spaces. Also, real estate costs are largely factored in IT/ITeS companies' billing rates, so letting spaces go can lead to a significant change in top-line projections,” ANAROCK said.
“The IT/ITeS sector boomed during the pandemic. While most companies operated in WFH mode, many large and mid-sized corporates decided to hold on to their office spaces. At between Rs 58 and Rs 78 per sq ft per month, the average monthly office rentals in all four IT/ITeS driven cities are comparatively lower than in NCR and MMR, where monthly rentals hover between Rs 80 and Rs 126 per sq ft,” explained ANAROCK Group chairman Anuj Puri.
Non-IT cities in top seven cities club had vacancy levels of over 16% with MMR, which has around 108 msft office stock, having vacancy of over 16%, Kolkata with 25msft office stock having a vacancy of 23.5% and Delhi NCR having highest vacancy of 28.5% with 128 msft office stock.