Gross absorption across top 7 cities touches a historic peak at 59 mn sq ft
The year 2019 emerged as the best year for office space leasing, with gross absorption of 59 mn sq ft. The demand is led by expansionary activity by occupiers in the technology space, ramp-up by flexible workspace players and investments of companies in global capability centers. The strong absorption, which surpassed Colliers’ expectations, was well led by solid infusion of supply during 2019 at 40.4 mn sq ft. During 2019, supply rose 35% to 40.4 msf. Hyderabad accounted for the highest supply with a 28% share, with Bengaluru close on the heels with a share of 27%. Bengaluru continues to be market leader Bengaluru continued to be the market leader with gross absorption of about 15 million sq ft in 2019, an increase of 6% from 2018. “The city accounted for 26% of the total leasing in the country led by Technology and IT-BPM sector (39%) followed by the engineering and manufacturing segment’s share at 16% and the flexible workspace share at 15%. During the year, Bengaluru saw supply infusion of 10.9 million feet”, says Arpit Mehrotra, Managing Director, Office Services, South India at Colliers International India. Hyderabad ranks 2nd in terms of demand in 2019; gross absorption touches highest ever Hyderabad witnessed 9.5 million sq feet of gross absorption during 2019 registering a 39% yoy growth in office space demand when compared to 2018. This new peak in office demand is driven by technology and flexible workspace players accounting for 51% and 32% respectively, during 2019. Interestingly, the flexible workspace players have ramped-up operations in the city with almost a four-fold increase in leasing activity during 2019 compared to previous year. Leasing through large deals in Delhi-NCR up 23% Gross absorption declined 6% to 9.5 msf. IT-BPM sector accounted for 27% of the leasing, followed by flexible workspace with a share of 18%. Leasing through large deals rose 23% from last year. In 2019, supply of 5.5 million sq feet infused in the market with majority of the completions in Noida. In addition, the market witnessed pre-commitments of around 2.4 million sq feet during the year, signaling strong confidence in the market. Mumbai’s gross absorption touches new high Mumbai’s gross absorption rose by 23% to 9.4 msf in 2019 compared to 2018. In line with Colliers’ forecast, Banking, Financial Services and Insurance (BFSI) occupiers dominated the leasing activity garnering a 27% share, followed by flexible workspace operators (19%) and technology occupiers (15%). This was well supported by supply infusion of 4.2 msf during 2019 spread across the micromarkets of Goregaon/JVLR, Andheri East and Thane. Demand in Pune up 17%, touches new peak In 2019, Pune witnessed highest ever gross absorption of 7.8 msf, a rise of 17% from 2018. The leasing activity was driven by absorption of pre-committed spaces by technology occupiers and flexible workspace operators as they continued to expand their footprint in SEZs. Overall, IT-BPM sector dominated the leasing activity in 2019, accounting for a 50% share, followed by flexible workspace operators and Banking and Financial Services (BFSI) sector each garnering a share of 20%. Gross absorption in Chennai rises 56% to a new high Chennai’s office space absorption rose by 56% YoY during 2019, touching 6.1 million sq feet. In the year 2019, the city witnessed a new peak in office space absorption after a down trend since 2012. Majority demand was led by the IT-BPM sector accounting for 55% share in gross absorption number. This is followed by flexible workspace players with about 1.0 million sq feet, accounting for 15% of the overall gross absorption. “Office space demand in 2019 has broken all previous records, even and exceeded the industry’s expectations with four of out seven cities touching new high in gross absorption. This displays huge confidence in the office market, and in India, as MNCs enter and expand into newer geographies for establishing presence. We expect technology companies to continue their strong streak in 2020, with flexible workspaces slowing their expansion phase”, said Megha Maan, Senior Associate Director, Research, Colliers International India.
Tags : News/Views