Office space leasing rose 8 per cent during the January-March period to nearly 8 million sq ft in eight major cities — Delhi-NCR, Mumbai, Bengaluru, Hyderabad, Pune, Chennai, Kolkata and Kochi, driven by IT/ITeS corporates which garnered a share of about 37 per cent of overall space leased during the period, according to property consultant CBRE.
“The first quarter of 2017 was one of the strongest quarters for the office market observed in recent years, with close to 8 million sq ft of office space take-up recorded across key cities in the country,” CBRE said in a statement.
The jump in transaction activity led by Delhi-NCR, which accounted for 19 per cent of total transacted space, followed by Mumbai (18 per cent) and Bengaluru (18 per cent). The three cities accounted for over 55 per cent of the transaction activity across leading cities.
The share of sectors such as engineering & manufacturing and the banking, financial services and insurance (BFSI) segments rose marginally, accounting for nearly 40 per cent in the overall space leased during the quarter.
Additionally, co-working operators continued to remain active, leasing entire recently completed developments in Mumbai and Bengaluru.
According to the ‘India Office MarketView Report — Q1, 2017’, leasing activity was led by small to mid-sized deals (less than 50,000 sq ft), accounting for almost 90 per cent of all transactions in Q1, 2017.
Anshuman Magazine, chairman, India and South East Asia, CBRE, said: “The commercial real estate market in India continues to exhibit strong performance. We have begun the year on a strong note, with key markets recording significant office space demand… The emergence of smaller cities for corporate expansion is also contributing to the overall growth of the segment.”
The various policy initiatives (RERA, GST, Infrastructure Status for Affordable Housing) coupled with a robust infrastructure development roadmap, is making the country an attractive destination for corporates looking to start up or expand operations in the country, he added.
According to the report, the Delhi-NCR market saw close to 1.5 mn sq ft of leasing, led by IT/ITeS corporates with a share of over 35 per cent, followed by BFSI and research, consulting and analytics firms. With limited supply addition witnessed during the quarter, rentals also saw a marginal rise, mainly across Special Economic Zone (SEZ) developments. With vacancy levels falling across key micro-markets, rentals did witness a marginal increase ranging
from 2-5 per cent across all SEZ developments in the city.
Ram Chandnani, managing director, advisory & transaction services, CBRE South Asia, said: “With the concept of co-working spaces gaining prominence among start-ups and established corporates, we expect new office spaces to embrace this concept in their future designs.”