India’s top eight cities have witnessed a 22 per cent decline in gross leasing of office space as global companies remain cautious about their expansion plans, according to Cushman & Wakefield.
Real estate consultant Cushman & Wakefield data showed that the gross leasing of office leasing declined to 17.42 million square feet in April-June this year from 22.41 million square feet in the year-ago period as corporates are taking longer time in taking decisions especially for large office space requirements.
However, the gross leasing rose 11 per cent from the previous quarter which saw absorption of 15.7 million square feet.
Anshul Jain, Head of APAC Tenant Representation and Managing Director, India & South East Asia, said, “India’s office real estate market continues with its growth momentum. A significant reason for its ability to buck the global recessionary headwinds is the rise in domestic demand.”
The entry of new GCCs (Global Capability Centres) and the ongoing expansion of the manufacturing and flex space segments are also helping the office sector widen its demand base, he added.
“We can expect the exuberance seen last few quarters in office real estate to continue, if the momentum holds,” Jain said.
As per the data, the gross office space leasing fell in five major cities and grew in three cities during April-June period of this year compared with the corresponding period of the previous year.
In Mumbai, the gross office space leasing fell 9 per cent to 2.73 million square feet in April-June from 2.99 million square feet in the year-ago period.
Delhi-NCR saw a 5 per cent growth in gross absorption to 3.59 million square feet from 3.41 million square feet.
The gross office space leasing in Bengaluru plunged 56 per cent to 3.03 million square feet from 6.9 million square feet on account of higher base effect and slow decision making by IT companies amid global uncertainties.
Chennai too saw a 41 per cent decline in office leasing to 1.58 million square feet from 2.66 million square feet.
The gross office space leasing rose 6 per cent in Pune to 3.11 million square feet from 2.93 million square feet.
In Hyderabad, the office demand fell 2 per cent to 2.65 million square feet from 2.71 million square feet.
In smaller office market, Kolkata saw a 32 per cent decline in leasing to 2,18,235 square feet from 3,20,719 square feet.
In Ahmedabad, the gross office space leasing grew 3 per cent to 4,85,822 square feet during April-June this year from 4,71,320 square feet in the year-ago period.
Commenting on the report, coworking space operator Urban Vault co-founder Amal Mishra noted that corporates are cautious in taking office space from developers/landowners for a long-term lease period because of global headwinds.
“However, enterprises are looking at managed office space from coworking operators to cut down on capital expenditure and avoid hassle on the management of their real estate space,” he said.
As a result, the share of leasing by coworking operators in the overall gross absorption of office space is inching up gradually and has reached anywhere between 15-20 per cent, Mishra said.
“The trend is likely to continue going forward, driven by the rising demand of flexibility and convenience from office occupiers,” he said.