E-commerce firms 2nd-largest occupier of office space: CBRE

E-commerce companies have emerged as the second-largest occupier of office space after the information technology (IT) sector during the April-June period in the country’s seven major cities, according to global property consultant CBRE. Office space leasing rose about 70 per cent during April-June to about eight million sq ft in seven cities as compared to the previous quarter, driven by higher demand from online retailers that contributed 17 per cent of the total absorption number.

These cities are Delhi-NCR, Mumbai, Kolkata, Chennai, Pune, Bengaluru and Hyderabad. E-commerce overtook banking, financial services and insurance as the second largest occupier of office space in India after IT, CBRE said in a report.

A key development was the spurt in office space leasing by online retail firms, with the likes of Amazon, Flipkart and Snapdeal committing to large spaces, particularly in the NCR and Bengaluru.

“This led to the sector emerging as the second largest occupier of office space during the second quarter with a share of about 17 per cent, followed by banking/financial services at around 16 per cent,” CBRE said.

With a share of 36 per cent, IT/ITeS remained the largest occupier of office space across these seven cities. “Demand for corporate office space in India’s leading cities firmed up in the second quarter of 2015, while market sentiments improved to a large extent.

“More than 8 million sq ft of commercial office space was taken up across the seven leading cities, translating to a quarter-on-quarter (q-o-q) increase of around 70 per cent,” CBRE said.

Bengaluru remained the top corporate office destination in the country, with nearly 35 per cent of this total absorption figure being generated in the city, where leasing remained upbeat in completed as well as under-construction projects.

Commenting on the report, CBRE South Asia Chairman and Managing Director Anshuman Magazine said: “Following a subdued first quarter, which is usually a period when corporates plan for annual real estate requirements, the second quarter witnessed a rise in office space absorption.” A number of blue-chip tenants moved into quality office developments in the April–June period, he added.

“Overall, improved macro-economic sentiments during the first half of the year led to increasing demand for office space from corporate real estate occupiers. We expect these positive market sentiments to continue for the rest of the year,” Magazine said.

Office space demand in the NCR, Mumbai and Chennai also remained upbeat. Almost 53 per cent of total office space transactions in Q2 2015 was contributed by these three cities, each witnessing a healthy take-up of more than a 1 million sq ft of corporate real estate.

The quarter noted strong rental growth (5–6%) in Bangalore’s Central Business District (CBD), while rentals remained stable in the prime office districts of most cities.

The Kolkata CBD, on the other hand, saw a decline in rental values on the back of weak occupier demand.