Bengaluru has emerged as the leading city in terms of annual absorption of office space in India with over 13 million sq.ft. of take up recorded. Along with Delhi NCR, Bengaluru accounted for over 50% share of absorption during the year. This was part of CBRE South Asia India Office MarketView Report – Q4 2017.
According to the report, the leasing activity in Bengaluru increased on a quarterly basis with space take up concentrated in non-SEZ developments and dominated by the Outer Ring Road micro market followed by the EBD, PBD-W & E and NBD micro markets.
Annual absorption of office space in India crossed 42 million sq. ft. in 2017, signaling the continued growth of the segment. On the other hand, Annual supply for prime office space was over 29 million sq. ft. during the year, a decline of about 18% on a y-o-y basis. Leasing activity in 2017 was driven by the IT sector with a 32% share. Other segments that drove demand for office space across key cities were BFSI (19%), engineering and manufacturing (17%) and research consulting and Analytics firms (8%). The share of global corporates operating in the country also increased during the year.
Demand for co-working space continued to witness an uptick (almost quadrupling in 2017 to touch 2.6 mn sq.ft.), with both global and domestic players continuing to expand their operations in key cities like Bengaluru, Gurgaon and Mumbai.
The report states that southern cities such as Bengaluru, Hyderabad and Chennai witnessed a rental increment across almost all micro-markets on an annual basis, while Delhi NCR saw rise in rental values only in core locations. In 2017, 90% of all transactions were for small to medium-sized spaces.
“In 2018, we expect demand for office space to remain steady across key locations in the country. Smaller cities could also see a rise in demand, on the back of healthy supply introduction in these locations. Due to the limited availability of ready to move in Grade A supply, occupiers with medium and large size requirements will focus on pre-commitments in under construction/built-to-suit developments across key micro-markets in the leading cities in the country,” Ram Chandnani, Managing Director – Advisory & Transaction Services India, CBRE South Asia said.