According to a recent report by the real estate consulting firm CBRE South Asia, office leasing activity across India’s top eight markets increased by 25% in Q1 2018. Approximately 11 mln sqft of office space has been recorded to be absorbed in the said quarter.
Anshuman Magazine, chairman (India and South East Asia), CBRE said, “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 highest demand for office space was reported in Bengaluru, and the city accounted for more than the combined share of the markets of Delhi-NCR, Mumbai and Hyderabad during the January to March period.
Supply of office space too tripled at 9.7 mln sqft during the review period. More than 80% of this new supply was in Bengaluru, Mumbai, Chennai and Delhi-NCR.
“Constrained supply of ready-to-move-in space, coupled with rising rentals, has led to this trend gaining traction in recent months. The uptick in leasing activity in the first quarter is largely due to several projects getting completed. Going forward, as corporate 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.
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 shortage 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.