 "Office leasing hits all-time high at 43 mn sq ft in 2016: CBRE")
Office space leasing rose by 9 per cent last year to touch record 43 million sq ft on robust demand from corporates looking to expand their operations, according to property consultant CBRE.
Unlike the housing segment, office leasing market seems to be unaffected by the demonetisation move.
"India's office market witnessed an all time high annual absorption of over 43 million sq ft in 2016, registering a growth of 9 per cent on y-o-y basis," CBRE India said in its India Office Market View Report - Q4 2016.
Supply during the year touched 35 million sq ft with India's office stock reaching a milestone of over 0.5 billion sq ft as of Q4 2016 - higher than several East Asian economies, it said.
CBRE tracks the primary office markets of seven cities — Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad and Pune.
"The commercial real estate market in India has been performing well for the past two years. This is evident in the record absorption levels witnessed in 2016. India continues to show positive movement, despite global uncertainties," said Anshuman Magazine, Chairman -India & South East Asia, CBRE.
The policy initiatives undertaken by the government in the recent past is expected to bring transparency into the sector, which is a much needed step towards enhancing consumer and investor confidence, Magazine said.
According to the report, Bengaluru and Delhi-NCR dominated office leasing on an annual basis, accounting for a share of about 47 per cent in the overall space take-up. However, both cities individually saw a marginal drop in leasing activity during last year.
Mumbai and Hyderabad witnessed an increase in space absorption on an annual basis, accounting for a share of 14 per cent each in leasing activity in 2016. Hyderabad witnessed a steep rise in occupier demand, with absorption more than doubling to cross 6 million sq ft during 2016.
The share of domestic corporates in transaction activity grew from 41 per cent in 2015 to 43 per cent last year.
"Commercial activity and occupier demand is expected to remain steady in the coming months, backed by corporates looking to expand/consolidate operations. Regulatory clearances in key locations are also likely to boost leasing activity in the coming quarters," said Ram Chandnani, Managing Director - Advisory & Transaction Services, CBRE South Asia.
Occupier enquiries for medium to large sized office spaces are expected to be closed in forthcoming quarters, adding to the transaction momentum, he added.
"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," Chandnani said.
Occupiers, while expanding their footprint, are likely to keep a strong check on city infrastructure and focus on space utilisation ratios and innovation in workplace strategies, he added.
