Top Indian cities see 10% hike in office leasing in June quarter: Report

Top cities in the country have seen a 10 per cent jump in gross leasing of office properties on a year-on-year basis during the second quarter of 2019, according to a new report. The total area under lease is 13.2 million square feet.

Technology, BFSI (banking, financial services and insurance), and flexible workspace operators continue their expansionary mode, supported by the quality supply infusion in Q2, which rose 67 per cent year-on-year to 10.3 million sq feet, said Colliers International. 
 

“Bengaluru maintains the top position in office-space leasing, driven by the technology and manufacturing occupiers, which had a share of 32 per cent and 18 per cent, respectively. Occupiers are preleasing space and even taking-up space in refurbished Grade-B buildings, due to tight vacancies amidst healthy demand,” said Ritesh Sachdev, head, occupier services, India, at Colliers International.

On a half yearly basis, gross absorption touched 24.5 million sq feet, inching up marginally by two per cent compared to same period last year, it said.

“The leasing activity has risen by 17 per cent compared to previous quarter indicating positive business sentiment as a result of re-election of the National Democratic Alliance government. During the second quarter, tech and IT-BPM companies continued the strong streak, accounting for 35 per cent share. This was followed by the engineering and manufacturing sector and BFSI sector, with a share of 12 per cent each. During the quarter, flexible workspace accounted for only 11 per cent of the leasing,” said Megha Maan, senior associate director, research, Colliers International India.

Colliers said the net absorption or fresh take-up of space amounted to 11.5 million sq feet, accounting for a massive 87 per cent of total leasing activity during Q2. Occupiers remain bullish about the business environment in the country as they continue to expand at a robust pace.

In terms of net absorption, Bengaluru accounted for the highest share in leasing at 28 per cent during Q2, followed by Hyderabad and Delhi-National Capital Region (NCR), which had a share of around 18 per cent, respectively.

In Hyderabad, expansionary mode of technology and flexible workspace operators was well supported by 3.5 million sq feet of supply during the quarter. Occupiers continue to pre-lease space in Hyderabad, as vacancies remain tight in preferred submarkets in the city.
 

Vacancy in the city is recorded at 5.5 per cent at the end of Q22019. In fact, more than 15 new companies entered the Hyderabad market in first half of 2019, from sectors such as tech, flexi spaces, and pharmaceuticals.

In Q2 2019, Delhi-NCR saw notable increase of 63 per cent in net absorption driven by tech (22 per cent), health care and pharmaceuticals (15 per cent) and flexi space operators (12 per cent). Noida has seeing a rising occupier interest, with a 38 per cent share in gross leasing in Q2 2019, and an 11 per cent increase in gross leasing compared to Q1 2018.