The office space sector in India continues to witness a robust recovery, as the leasing activity during January-March jumped 97 per cent y-o-y to touch 11.4 million sq ft, according to a report by India’s leading real estate consulting firm CBRE South Asia.
“Bengaluru, Chennai and Delhi-NCR dominated absorption during the quarter, accounting for almost two-thirds of the transaction activity. Technology corporates drove leasing with a share of about 34 per cent, followed by BFSI firms (17 per cent), flexible space operators (13 per cent), engineering & manufacturing (12 per cent) and research, consulting & analytics (11 per cent) firms,” according to the report.
Supply witnessed in the March 2022 quarter stood at around 9.4 million sqft, a slight dip of around 11 per cent y-o-y and 41 per cent q-o-q. Bengaluru, Hyderabad and Chennai dominated development completions, accounting for a cumulative share of about 70 per cent. The supply was driven by non-SEZ developments with a share of around 83 per cent, it added.
Small- (less than 10,000 sqft) to medium-sized (10,000-50,000 sqft) transactions drove the office space uptake with a share of around 84 per cent. Pune and Chennai, followed by Delhi-NCR and Bengaluru, dominated large-sized deal closures.
Anshuman Magazine, chairman and CEO (India, South-East Asia, Middle East & Africa) of CBRE, said, “With the government’s evolving COVID-19 protocols and the recovery in office leasing in 2021, we expect the positive momentum to further strengthen in 2022. We continue to witness a pickup in long-term decision-making by occupiers, aided by ‘return-to-work’ strategies, thereby accelerating project completions.”
Ram Chandnani, managing director (advisory and transactions services) of CBRE India, said that as economic recovery continues to gain momentum, the increase in leasing activity is expected to bring a new focus on large-sized and high-quality buildings by developers to differentiate their assets and attract occupiers.
“We also expect large institutional players to continue with greenfield investments via joint ventures/ partnerships/ platforms or brownfield investments via REITs, which in turn would also boost the upcoming supply in the coming years,” Chandnani added.
The supply will continue to be dominated by Bengaluru, Hyderabad and Delhi-NCR, which would drive close to 70 per cent of the completions in 2022. The SEZ supply will mostly be led by Hyderabad and Delhi-NCR, while non-SEZ supply would be led by Bengaluru, followed by Delhi-NCR and Hyderabad.
It said that renewals, renegotiations and the addition of flexibility options are likely to be the focus of occupiers in the short term. “We expect to see clearer evidence emerging in any corporates’ intended shift towards hybrid working policies, with several occupiers planning to implement policies allowing office-based working with the option of working remotely.”
Recently, another real estate consultancy firm Knight Frank also said office space leasing registered a 25 per cent year-on-year jump in January-March 2022 to 10.8 million square feet (msf). Bengaluru remained the foremost market with total leasing of 3.5 msf, followed by NCR with 2.3 msf.
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