Bottom Line: Flexible workspaces (co-working) account for 30% of office leasing.
Total gross leasing activity in India touched almost 11 million sq ft during the first quarter of 2019, as tech and IT companies continue to expand, along with the rapid expansionary mode of flexible workspaces.
Occupiers continued to expand across cities led by a robust business ecosystem, undeterred by the upcoming General Elections. The leasing activity, although robust, declined by 10% from the corresponding quarter last year due to delay in quality supply in top markets such as Bengaluru, Hyderabad, Pune, etc.
“Bengaluru accounted for the highest share in leasing (31%) followed by Mumbai and Chennai, which had a share of 19% and 14%, respectively. The southern cities continued to outperform, with leasing in Hyderabad doubling, while Chennai recorded a 60% jump in leasing. Companies are still in the expansion mode led by a robust business support ecosystem”, said Ritesh Sachdev, Senior Executive Director, Occupier Services at Colliers International India.
Tech & IT-BPM sector accounted for the largest share at 38%. Flexible workspaces (co-working) has contributed close to 30% of office leasing. The demand for space was not only led for foreign players, but also home-grown operators who are rushing to capture a pie of this space. The absorption by flexi-operators will pick up pace in the wake of developers jumping onto the bandwagon.
New supply during the quarter declined by 17% to 7.7 million sq ft. About 58% of the supply (3.0 million sq ft) was seen in Bengaluru market, followed by Mumbai at 0.8 million sq ft.
“The year has started on a positive note and we expect leasing to remain healthy for the rest of the year. We see demand from IT occupiers in the form of captive centers to continue to remain strong, along with take-up by flexible workplace operators. Interestingly, Tech & IT-BPM sector accounted for the largest share at 38%, and Flexible workspaces (co-working) contributed close to 30% of office leasing – the highest share ever for the space”, says Megha Maan, Senior Associate Director, Research at Colliers International India.
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