Office leasing by information technology companies rising in tech hubs

The share of information technology or IT companies in office leasing has risen in tech hubs such as Bengaluru, Gurgaon among others.

The share of IT firms in office leasing in Bengaluru has gone up from 70 per cent in 2016 to 77.32 per cent in 2017, according to property data analytics firm, Propstack.

The share of IT firms in office leasing in Noida has shot up from 59 per cent in 2016 to 64.17 per cent in 2017.

Even in India's financial hub Mumbai,  the share has risen from 46.4 per cent to 50 per cent, Propstack said.

"Companies who have an option to buy space for the long term are increasingly preferring to lease space for the short to medium term to retain flexibility in this business operations. It also positions them better to handle potential uncertainties due to the prevailing political & business environment in US & Europe," Raja Seetharaman, director at Propstack.

Seetharaman said clients have been able to maintain status quo instead of escalated rentals and in some cases have managed to structure better deal terms.

"Transactions sizes are getting smaller at an average of 25000 sq ft; lock in period is getting shorter and overall flexibility is being structured in lease terms like rent escalation, etc," he said.

Ashok Kumar, managing director at Gennext Parners said leasing activities by foreign/Indian IT/ITes companies in last 6 months have again witnessed uptake after lull of 9 months of wait & watch policy due to top three policy disruptions of demonetisation/RERA/GST in 2016-17. 

"The demand will continue to [be] driven by IT/ITes, BFSI, Industrial, logistic move due to push for Make in India," he said.

He added that other drivers included increasing demand by Millennials for small format wine/Beer/tea/coffee cafe and Food/ Retail sectors. 

"We expect leasing of space may touch 35 MN sft in 2018-19," Kumar further said.