Office pre-leasing in top cities sees a big jump

Corporates are locking down large office spaces across the country as they revive expansion plans and prepare for employees to return to offices in full force following a sharp drop in COVID-19 cases across the country.

Big technology, consulting, and financial services firms such as Google, Deloitte, Amazon, Qualcomm, and Wells Fargo have pre-committed large office space in major cities in the first quarter of this year.

Badal said, “Office expansion plans and positive sentiment for occupiers have been witnessed across cities. The surge in new leased locations and pre-commitments, especially in the top markets, will boost the growth of the office market for the coming quarters. Indicates confidence and a healthy pace.” Yagnik, MD, Tenant Representation, Cushman & Wakefield India.

At a pan-India level, the pre-commitment of office space is 3.18 msf, an increase of 77% annually, indicating that occupants are looking for space in quality supply.

Among the top 8 cities, Bengaluru market witnessed the highest pre-commitment, followed by Chennai and Pune. In Bengaluru, pre-leasing accounted for 30% of the total gross leasing activity during the quarter, indicating an improvement in occupant sentiments.

The IT-BPM sector had a high share of leased space (37%) during the quarter, followed by engineering, manufacturing, telecommunications and media sectors which contributed 22% and 16%, respectively.

“We see that demand will outpace supply in key markets, and we will be back to our 2019 numbers this year, if there is no more fear,” said Jugi Marwah, CEO of Prestige Office Ventures. With new supply hitting markets for two quarters now, the occupiers are likely to largely take advantage of the stable rental position and further strengthen expansion plans.

Bijay Aggarwal, MD, Salarpuria Sattva said, “There is no speculative construction as builders are focused on completing existing projects. Pre-leasing commitments remain largely intact and there are limited downsizing activities by large corporations.” Leasing activity also witnessed a sharp jump on the back of large pre-commitments and growth in fresh leasing.

January-March Q1 2022 all-India net absorption was 6.7 msf, which is 95% higher than Q1 2021.

Cushman & Wakefield said cities such as Delhi NCR, Bengaluru and Pune account for about 68% of the total net absorption.

Originally published at Pen 18