are low as occupiers opt for cheaper office locations in the suburbs, preferring to lease than to buy. Smaller spaces are being rented as companies cut back on costs.
In the first nine months of 2013, Mumbai, for example, saw the share of lease transactions for less than 10,000 sq ft rise to 39% from 36% last year. The share fell the most in the 10,000 sq ft and 50,000 sq ft bucket to 41% from 50% last year and remained stagnant at 11% for transactions above 1 lakh sq ft, data from Jones Lang LaSalle (JLL) India show.
“Mumbai’s average size of deal transaction is 30,000 sq ft,” said Ashutosh Limaye, head of research, JLL India.
In Delhi NCR, transactions of less than 25,000 sq ft accounted for 34% of total take-up during July-September, while transactions of 1 lakh sq ft saw a drop in their share of the total take-up, says the DTZ report.
Rentals, however, have remained stable in most parts of the country during the quarter, with the exception of Mumbai, where pressure was seen in rentals in Nariman Point and Bandra-Kurla Complex (BKC) with most corporates preferring more cost-efficient peripheral locations, according to the latest CBRE South Asia report. Rents were down around 2% and 10% on on a quarterly and annual basis, respectively to Rs 250 per sq ft per month in Nariman Point, while in BKC, rents have fallen 1.8% and 8% on a quarterly annual basis, respectively, to Rs 275 per sq ft per month. In the Gurgaon and Noida areas of NCR, the rentals remained unchanged at Rs 91 per sq ft per month and Rs 40 per sq ft per month on a quarterly and annual basis, respectively. Corporates are consolidating their operations within a city to peripheral, suburban locations to buildings that have modern amenities and where they can acquire more space later.