The engineering and manufacturing segment and the banking and financial services drove demand for office space leasing in the third quarter of 2017, even as e-commerce firms increased their share in office leasing activity, according to a report by real estate consultancy firm CBRE South Asia Pvt. Ltd.
The report said, as in earlier quarters, space take-up was dominated by the IT and ITES sector with 34% share of overall space leased across key cities. “Leasing activity for prime office space across key Indian cities remained robust during the quarter under review,” the report said.
‘Co-working rises’
While the engineering and manufacturing segment accounted for 19% of the office space, it was followed by the BFSI (banking, financial services and insurance) segment at 10% and the e-commerce segment. Co-working and business centres were seeing increased activity, CBRE said. A nine-month review (January-September) showed that absorption was marginally lower at 29 million sq ft, with Bangalore leading the activity followed by Hyderabad, which is emerging as the city of choice for corporates. New office space completion dropped 3% year-on-year.
CBRE said that overall take-up would remain strong, but corporates were likely to remain cost-sensitive. Tenants were willing to pre-commit to have an upper hand in rental negotiations. it said.
In the third quarter, leasing activity was driven by small and medium-sized transactions (of less than 50,000 sq. ft.) with even smaller transactions of less than 10,000 sq. ft. accounting for 40% of all transactions reported during the quarter.
Delhi NCR, Mumbai and Bengaluru accounted for almost 80% of the supply addition followed by Chennai and Hyderabad.
CBRE said that with supply continuing to remain constrained across most cities, the demand-supply gap would lead to rental growth across most peripheral and suburban micro markets.Pre-commitments in projects nearing completion are also expected to continue due to limited availability ot ready-to-move-in space in the coming quarters.