India’s office market absorption recorded at 11mn sq. ft. in Q1 2018: CBRE

Office space leasing rose by 25 per cent during January-March in top eight cities to 10.8 million sq ft compared to year-ago period on increased demand from corporates, bucking the trend of low absorption in the first quarter, property consultant CBRE said. During January-March quarter of 2017, office space leasing stood at 8.6 million sq ft in eight cities -- NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, Kolkata and Kochi. In its latest report for January-March quarter of 2018, CBRE said that close to 11 million sq ft of space take-up was recorded - a 25 per cent increase from Q1 2017. This is a departure from the norm as the first quarter of the year usually witnesses subdued activity because corporates are still finalising their business strategies". Office leasing activity across India's top 8 markets was at an all-time high in the first quarter of the year. Bengaluru witnessed office space leasing of 4.8 million sq ft in Q1 of 2018, compared to 2.2 million sq ft in the same period of last year. NCR and Mumbai recorded office space leasing of 1.9 million sq ft and 1.4 million sq ft, respectively. Tech corporates led office space take-up during the quarter with a 25% share, while BFSI firms garnered a 24% share. The share of e-commerce firms rose to 15%, thanks to a few large-sized deals by leading global and domestic players. Other sectors that contributed to leasing activity were engineering and manufacturing, research, consulting and analytics and co-working/business centre operators. Pre-commitments continue to be the primary mode of transaction, especially in cities such as Bangalore that had a dearth of quality ready-to- move-in supply. "India's office market has begun the year on a strong note, dispelling fears of technology and other disruptions impacting the market. With strong economic fundamentals, constantly improving business environment, and the government's concerted efforts to improve infrastructure in our cities, India's attractiveness as a preferred market in the region for international and domestic occupiers has only grown," said Anshuman Magazine, Chairman, India and South East Asia, CBRE said. India offers quality offices spaces at reasonable rentals, he added. Commenting on the findings of the report, Ram Chandnani, MD Advisory & Transaction Services, India, CBRE South Asia, said: "Over the past several quarters, pre-commitments by occupiers in under-construction projects has impacted leasing activity across India's office market. Constrained supply of ready-to-move-in space, coupled with rising rentals, has led to this trend gaining traction in recent months." The uptick in leasing activity in the first quarter is largely due to several projects getting completed. During the quarter, 45% of all the transactions were for small-sized spaces, while mid-sized transactions accounted for a 42% share. There were a few large-sized deals, most of which were recorded in Bangalore, followed by a few in Mumbai, Delhi-NCR, Chennai and Hyderabad.