Office leasing activities in India picked up pace in the first quarter of 2022, registering a growth of 97 % to 11.4 million sq. ft on a year-on-year basis, according to a report by CBRE.
The latest report revealed that Bengaluru emerged as the frontrunner in overall office leasing in Q1 2022.
Bengaluru, Chennai and Delhi-NCR dominated absorption during the quarter, accounting for almost two-thirds of the transaction activity. Technology corporates drove leasing with a share of about 34%, followed by BFSI firms (17%), flexible space operators (13%), engineering and manufacturing (12% and research, consulting and analytics (11%) firms, said the report titled ‘CBRE India Office Figures Q1 2022’.
According to the report, office space take-up was driven by small- (less than 10,000 sq. ft) to medium-sized (10,000-50,000 sq. ft.) transactions with a share of around 84%. Pune and Chennai, followed by Delhi-NCR and Bengaluru, dominated large-sized deal closures.
The report also noted that supply witnessed in Q1 2022 was around 9.4 million sq. ft. – a slight dip of around 11% Y-o-Y and 41% Q-o-Q. Bengaluru, Hyderabad and Chennai dominated development completions, accounting for a cumulative share of about 70%.
Supply was driven by non-SEZ developments with a share of around 83%. Going forward too, supply would continue to be dominated by Bengaluru, Hyderabad and Delhi-NCR, which would drive close to 70% of the completions in 2022, the report added. SEZ supply would mostly be led by Hyderabad and Delhi-NCR, while non-SEZ supply would be led by Bengaluru, followed by Delhi-NCR and Hyderabad, it said.
In Bengaluru, the key sectors driving absorption included research, consulting and analytics (30%), technology (25%) and BFSI (22%) firms. Delhi-NCR leasing outpaced supply, led by tech and BFSI corporates. Transaction activity was driven by the IT and SEZ segments, with a cumulative share of 83%. The key sectors driving absorption included technology (21%), BFSI (19%) and engineering and manufacturing (11%) players, the report noted.
In Mumbai, absorption outpaced supply; BFSI and flex players drove leasing. The space take-up was witnessed across both IT and non-IT segments with a share of 53% and 41 %, respectively. Key sectors driving absorption included BFSI firms (24%), flexible space operators (21%), and engineering & manufacturing companies (16%), the report said.
“With the government’s evolving COVID-19 protocols and the recovery in office leasing in 2021, we expect the positive momentum to further strengthen in 2022. We continue to witness a pickup in long-term decision-making by occupiers, aided by ‘return-to-work’ strategies, thereby accelerating project completions,” said Anshuman Magazine, Chairman and CEO – India, South-East Asia, Middle East & Africa, CBRE.
“As economic recovery continues to gain momentum, we expect the increase in leasing activity to bring a new focus on large-sized and high-quality buildings by developers to differentiate their assets and attract occupiers. We also expect large institutional players to continue with greenfield investments via JVs / partnerships/platforms or brownfield investments via REITs, which in turn would also boost the upcoming supply in the coming years,” said Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India.
Going forward, renewals, renegotiations, and the addition of flexibility options are likely to be the focus of occupiers in the short term. Clear evidence would also emerge on the corporates’ intended to shift towards hybrid working policies, with several occupiers planning to implement policies allowing office-based working with the option of working remotely.
Environmental and sustainability issues, such as carbon emissions, the use of sustainable materials, energy efficiency and wellness enhancements are likely to become ever more important to occupiers and owners of office buildings, the report added.