Office leasing in the country increased by 9 percent year-on-year (YoY) touching 12.6 million square feet (msf) between January and March 2023 period, according to real estate consultant CBRE.
The report, titled 'CBRE India Office Figures Q1 2023', said that in the same period development completions touched 11.6 msf, a 31 percent yoy increase.
Bangalore, Delhi-NCR and Chennai accounted for 62 percent of the overall transaction activity during the quarter.
Bangalore, Delhi-NCR, Pune and Hyderabad led supply addition during the quarter, accounting for a cumulative share of nearly 82 percent.
The non-SEZ segment dominated development completions with a share of about 88 percent, which went up from 82 percent during the same period in the previous year.
The report also pointed out that nearly half of the newly completed developments during the current quarter were green-certified (LEED or IGBC), indicating a strong emphasis on sustainability.
“Short-term macroeconomic pressure caused by monetary tightening, inflation, the anticipated slowdown in developed nations, and geopolitical difficulties might impact occupiers’ expansion plans and decision-making in 2023," Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said.
In contrast to the previous quarters, where technology corporates dominated leasing activity, Banking, Financial Services, and Insurance (BFSI) firms and flexible space operators drove space take-up in the Jan-March quarter with a share of about 22 percent each. This was followed by technology corporates (20 percent), engineering & manufacturing companies (11 percent) and research, consulting & analytics organizations (10 percent).
Medium- to large-sized deal closures by global capability centres of BFSI corporates, Indian banks and domestic flex operators dominated leasing activity in the Jan-Mar’23 quarter.
The cumulative share of BFSI firms and flexible space operators grew from 20 percent in Oct-Dec’22 to 44 percent during Jan-Mar’23 due to a significant increase in large-sized deal closures.
However, the impact of these situations on the leasing decisions of multinational corporations has not yet been identified. Going forward, leasing activity could pick up, especially in the second half of 2023, Magazine added.
Small (less than 10,000sq ft) to medium-sized (10,000 – 50,000 sq ft) transactions drove office space take-up in Jan-Mar’23 with a share of 84 percent – a marginal decrease on a quarter-on-quarter basis.
The share of large-sized deals (greater than 100,000 sq ft) in Jan-Mar’23 remained similar to the previous quarter at 6 percent.
Bangalore, followed by Delhi-NCR, Hyderabad and Chennai, dominated large-sized deal closures in Jan-Mar’23, while a few such deals were also reported in Pune.
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “In line with past trends, Bangalore, Delhi-NCR and Hyderabad are expected to continue to drive absorption, while Chennai, Mumbai, Pune and Kolkata would also witness robust space take-up. Select tier-II markets would also continue to attract corporates’ attention as the next growth destinations due to improving infrastructure and the presence of a large talent pool.”