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India’s office market witnesses 11mn sq ft of office space take-up in first quarter of 2018: Report

Bengaluru reports the highest demand for office space and accounts for more than the combined share of markets of Delhi-NCR, Mumbai and Hyderabad

Representative Image.

Representative Image.

Office leasing activity across India’s top eight markets was at an all-time high in the first quarter of the year with close to 11 mn sq ft of space take-up being recorded – a 25 percent increase from the first quarter of 2017.

Bengaluru reported the highest demand for office space and accounted for more than the combined share of markets of Delhi-NCR, Mumbai and Hyderabad, according to CBRE’s latest India Office MarketView – Q1 2018 report.

This, says the report, is a departure from the norm as the first quarter of the year usually witnesses subdued activity because corporates are still finalising their business strategies. During the January to March period, Bengaluru reported the highest demand for office space and accounted for more than the combined share of the markets of Delhi-NCR, Mumbai and Hyderabad.

In line with the increasing demand, supply addition more than tripled to touch 9.7 mn sq ft during the review period, indicating continued occupier interest for quality office spaces across the country. More than 80 percent of this new supply was in Bengaluru, Mumbai, Chennai and Delhi-NCR, says the report.

Tech corporates led office space take-up during the quarter with a 25 percent share, while BFSI firms garnered a 24 percent share. The share of e-commerce firms rose to 15 percent, thanks to a few large-sized deals by leading global and domestic players. Other sectors that contributed to leasing activity were engineering and manufacturing, research, consulting and analytics and co-working/business centre operators. Pre-commitments continue to be the primary mode of transaction, especially in cities such as Bengaluru that had a dearth of quality ready-to-move-in supply.

“India’s office market has begun the year on a strong note, dispelling fears of technology and other disruptions impacting the market. With strong economic fundamentals, constantly improving business environment, and the government’s concerted efforts to improve infrastructure in our cities, India’s attractiveness as a preferred market in the region for international and domestic occupiers has only grown. Moreover, the country offers quality offices spaces at reasonable rentals,” says Anshuman Magazine, Chairman, India and South East Asia, CBRE.

Commenting on the findings of the report, Ram Chandnani, Managing Director, Advisory & Transaction Services, India, CBRE South Asia Pvt. Ltd. said, “Over the past several quarters, pre-commitments by occupiers in under-construction projects has impacted leasing activity across India’s office market. The constrained supply of ready-to-move-in spaces, coupled with rising rentals, has led to this trend gaining traction in recent months. The uptick in leasing activity in the first quarter is largely due to several projects getting completed. Going forward, as corporates continue to evaluate cost-effective options and stagger their expansion plans, pre-commitments in under-construction projects will have a significant impact on office leasing activity across key cities.”

During the quarter, 45 percent of all the transactions were for small-sized spaces while mid-sized transactions accounted for a 42 percent share. There were a few large-sized deals, most of which were recorded in Bengaluru, followed by a few in Mumbai, Delhi-NCR, Chennai and Hyderabad.


  • Gurgaon dominated leasing activity in the city

  • New supply consisted of a few medium-sized non-IT developments in Gurgaon and an SEZ development along the Noida Expressway

  • Leasing activity was primarily driven by the tech sector, followed by corporates from the research, consulting and analytics, and BFSI sectors


  • Quarterly leasing activity witnessed an uptick in the city

  • More than half of the leasing activity was in the Secondary Business District (SBD) and the Peripheral Business District (PBD) of Powai and Vikhroli

  • BFSI firms and co-working operators dominated leasing activity, followed by firms from infrastructure, real estate and logistics

  • Rental values remained stable during the quarter


  • The city continued to lead the country’s office demand and supply activity

  • Quarterly leasing increased significantly due to culmination of pre-commitments and space take-up in recently completed developments

  • Leasing activity was primarily driven by BFSI corporates followed by e-commerce, research, consulting and analytics, and tech firms

  • Rental values across key markets in the city appreciated marginally during the quarter


  • Supply addition was limited to one medium-sized development in the extended IT corridor

  • Sustained occupier interest resulted in a majority of the quarterly leasing activity being concentrated in the IT corridor of the city

  • Tech firms, followed by engineering and manufacturing and healthcare firms, dominated leasing activity

Trends going forward

Increased focus on space utilization ratios and innovation in workplace strategies is anticipated to lead to an uptick in demand for co-working spaces.

Another emerging trend is the growing interest of occupiers looking to lease space in tier II cities such as Nasik, Jaipur, Mangalore, Trivandrum and Indore.

These smaller towns offer quality space at lower rentals supported by good physical and social infrastructure and are well connected to the nearby larger cities, says the report.
Moneycontrol News
first published: Apr 11, 2018 05:34 pm