Pune’s office market is gradually picking up with approximately 1 million sq. ft. of gross office space being absorbed during July to October 2020. This is in comparison to a 1 million sq. ft. absorption in the first half of 2020.
The first ten months of the year witnessed approximately 2 million sq. ft. of gross absorption, a report by JLL has said.
While absorption was sluggish in H1 2020 owing to the lockdown, the city witnessed large corporate occupiers renewing their existing office leases as a part of their long term corporate real estate strategies during July to October 2020.
The leasing has been primarily led by BFSI and Fintech, GICs, Indian and global technology services firms, product companies and flex or co-working space operators. Additionally, Pune is also getting recognised as a start-up and R&D hub.
“Most sectors continue to expand their footprint in the city owing to the diverse and quality talent base, large world class campuses offering competitive rents and the city’s vibrant and cosmopolitan lifestyle. Due to these factors, Pune remains a favourite among occupiers, developers and investors,” said Sanjay Bajaj, managing director - Pune, JLL.
“Pune is among the fastest growing flex space in the country today,” he added.
The average vacancy in the city during the last three quarters remained range bound and stands at 4.7 percent by end of Q3 2020. Approximately 7 million sq ft. of new supply is scheduled for completion by the end of 2021.
As for rentals. They are plateauing in Pune offering value driven propositions and opportunities to occupiers. Moreover, the landlords across the city are more flexible now and open to innovative deal structuring, including incurring capital expenditure towards fit outs on behalf of occupiers. These factors are helping occupiers achieve a more cost-effective cash outflow.
The city has been attracting large institutional funds and developers. Approximately 47 percent of the city’s Grade A stock is directly or indirectly under the ambit of institutional funds or developers.
These investments are spread across greenfield, brownfield, rent-yielding ready assets’ and an additional 25.0 million sq. ft. is projected to be added in the next five years.