Office space leasing activity across India’s top eight markets increased by 25% to 10.8 million sq ft during January-March, 2018 supported by demand from corporates, according to a report by CBRE South Asia.
During January-March 2017, office space leasing stood at 8.6 million sq ft in eight cities — NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, Kolkata and Kochi.
“Office leasing activity across India’s top 8 markets was at an all-time high in the first quarter of the year,” it said.
Bengaluru reported the highest demand for office space and accounted for more than the combined share of the markets of Delhi-NCR, Mumbai and Hyderabad during January to March.
Supply of office space too tripled at 9.7 million sq ft during the review period. More than 80% of this new supply was in Bengaluru, Mumbai, Chennai and Delhi-NCR.
Tech corporates led office space take-up during the quarter with a 25% share, while BFSI firms garnered a 24% share. The share of e-commerce firms rose to 15%, thanks to a few large-sized deals by leading global and domestic players.
Pre-commitments continue to be the primary mode of transaction, especially in cities such as Bengaluru that had a dearth of quality ready-to-move-in supply.
During the quarter, 45% of all the transactions were for small-sized spaces while mid-sized transactions accounted for a 42% share. There were a few large-sized deals, most of which were recorded in Bengaluru, followed by a few in Mumbai, Delhi-NCR, Chennai and Hyderabad.
“With strong economic fundamentals, constantly improving business environment, and the government’s concerted efforts to improve infrastructure in our cities, India’s attractiveness as a preferred market in the region for international and domestic occupiers has only grown. Moreover, the country offers quality offices spaces at reasonable rentals,” the report quoted Anshuman Magazine, chairman (India and South East Asia), CBRE as saying.
Going forward, as corporates continue to evaluate cost-effective options and stagger their expansion plans, pre-commitments in under-construction projects will have a significant impact on office leasing activity across key cities, said Ram Chandnani, managing director (advisory & transaction services) of the company.