Bengaluru led the overall office demand with a market share of 36%: Colliers Research
The year 2017 witnessed a pan-India leasing volume of around 42.8 million sq ft, which is marginally up from 2016 absorption level (around 41.6 million sq ft in 2016). Bengaluru remained the frontrunner in office leasing, witnessing a record-breaking leasing of more than 15 million sq ft, occupying 36% of market share followed by NCR (18%), Mumbai (13%), Chennai (11%), Hyderabad (10%), Pune (8%) and Kolkata (2%), says Colliers Research.
The demand for Grade A office space was primarily driven by technology companies followed by engineering, manufacturing, banking and finance, and co-working operators.
“The trend of pre-committing large spaces had picked up in 2017, with more than 4 million sq ft of office space pre-committed in 2017, in under-construction projects. Furthermore, coworking or flexible working space have made their entry into the market in a big way, representing about 11% of total absorption in 2017, compared to last year's share of 3%”, says Ritesh Sachdev, Senior Executive Director, Occupier Services, Colliers International India.
As per Colliers Research, in 2018, one of the biggest shifts in workplace strategies in India is likely to be the improvement in flexibility offering to occupiers by developers. Flexible office spaces will flourish in coming years.
The trend of high pre-commitment rate in large office spaces and SEZs will also follow. Occupiers will explore Tier-II & III cities for back-office requirements.
Many technology and e-commerce companies are exploring expansion in Tier II-III cities due to cheaper resource and rising cost of power. Given the government's push for smart cities development, firms should consider expanding in the cities where the state governments intend to spur growth by offering more fiscal and non-fiscal incentives and building infrastructure projects such as airports and railways, it says.“One of the biggest shifts in workplace strategies in India is likely to be the improvement in the degree of flexibility offered to occupiers by the developers. We expect these large players to compete against traditional offices to target major corporates besides focusing on small-and-medium enterprises. Landlords should recognise the benefits of flexible workspace and redesign their office spaces across their portfolios. They should look to offer quality and more efficient office space through subdividing floors into multiple office suites. The strategy should be to redesign existing space to create collaborative workspaces in order to meet the needs of smaller tenants from which we are currently witnessing strong demand”, says Surabhi Arora, Senior Associate Director, Research, Colliers International India.