Office space leasing rose marginally during January-March 2019 to 12.8 million sq ft in nine major cities of the country. As per CBRE’s Office Market View Q1 2019 report, office space leasing was led by Hyderabad, which has beaten Bengaluru for the first time ever in office space absorption.
Office space leasing in Hyderabad rose to 3.5 million sq ft during January-March 2019 from 1.1 million sq ft in the year-ago period. The rise of Hyderabad at the top spot can be attributed to the rise in its office space as well as a sharp decline seen in Bengaluru’s absorption space to 2.5 million sq ft from 5.5 million sq ft during the period under review as per the report.
Other dominant markets included Mumbai and Delhi-NCR with all four dominant cities accounting for more than 75% of the leasing activity. Here are the other main highlights of Office Market View Q1 2019:
- Small to Medium-Sized Transactions:
Office space take-up was dominated by small (33%) and medium-sized transactions (48%). The share of large-sized deals (greater than 100,000 sq. ft.) increased from 7% in Q4 2018 to 10% during this period.
- Tech Is Biggest Occupier:
Tech corporates continued to drive office space take-up in the country, with their share in total leasing rising from 22% in Q1 2018 to 33% in Q12019. Other sectors such as engineering & manufacturing (10%), BFSI (9%) and research, consulting & analytics (7%) also contributed to the leasing activity.
- Rise Of Pre-Lease:
As a strategy, occupiers continue to future-proof their portfolios and hedge against future rental escalations by pre-leasing space across various cities.
- Supply:
Supply addition in Q1 2019 rose by 23% on a quarterly basis to touch 13.4 million sq. ft. Hyderabad, Bangalore, Delhi-NCR and Mumbai accounted for about 80% of the quarterly supply addition.
- Sustained Rental Momentum:
Rental growth remained limited to core locations in Delhi-NCR.