Gross leasing of office space increased 5 per cent during 2018 across nine major cities to touch a record 47.4 million square ft mainly driven by global technology firms and co-working operators, according to property consultant CBRE.
Supply of office space rose 17 per cent to 34.9 million square ft during 2018, the consultant said in a report released Monday.
The 'India Office MarketView- Q4, 2018' report tracks nine key markets of NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad and Kochi.
"By the end of 2018, gross leasing activity surpassed the 45 million square ft mark and touched about 47.4 million square ft, recording a growth of 5.3 per cent year-on-year," CBRE said.
Bengaluru, followed by NCR, Hyderabad and Mumbai dominated office leasing, accounting for almost 80 per cent of the overall space take-up, it said.
"Office leasing activity is expected to remain stable in the short term, backed by corporates looking to expand or consolidate their operations.
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"Similar to last year, we expect that occupiers would put in greater efforts to build in flexibility in their portfolios due to changes in the business environment," said Anshuman Magazine, Head of India, South East Asia, Middle East and Africa, CBRE.
The filing of India's first REIT, primarily comprising office assets, is also likely to improve investor interest in this segment in the coming quarters, he added.
In 2018, the share of the tech sector in overall space absorption rose to about 34 per cent from 32 per cent in 2017. Overall, on an annual basis, 11 per cent increase was reported in space take-up by tech firms. MNCs accounted for almost 75 per cent in overall space take-up by tech firms last year.
Flexible space operators closed more than 6 million square ft of leasing during 2018. Additionally, in the wake of the approaching sunset clause, the share of SEZ leasing rose from 23 per cent in 2017 to 28 per cent in 2018.
"Overall, we expect infrastructure initiatives such as completion of highways and introduction of Mass Rapid Transport System (MRTS) services, etc to influence occupier preferences and decision-making in the coming quarters.
"In lieu of the sunset date on SEZ benefits, we also expect the share of leasing in SEZs to rise across cities in 2019," said Ram Chandnani, Managing Director, Advisory & Transaction Services, India, CBRE South Asia.
The year 2018 recorded almost 16 million square ft of pre-leasing activity, mainly in Bengaluru, Hyderabad, Pune and Gurugram (Haryana).