Indian corporates overtook American firms in gross leasing of office space during the first quarter of this calendar year with nearly 50 per cent share in the total demand, according to CBRE India.
In 2022, it was for the first time that India Inc beat American firms in leasing. On Wednesday, CBRE South Asia Pvt Ltd released the findings of its office report stating that the gross leasing of office space rose 9 per cent year-on-year to 12.6 million square feet during the January-March period across nine cities as against 11.6 million square feet in the year-ago period. “Similar to the previous quarter, domestic firms overtook American companies in terms of quarterly leasing, accounting for nearly half of the leasing activity in the January-March quarter,” CBRE said in a statement.
The gross leasing of office space rose 40 per cent in 2022 to 56.6 million square feet across nine major cities from 40.5 million square feet in the previous year. Out of the total absorption of office space in 2022, 27.73 million square feet area was leased by domestic firms while 20.37 million square feet by American companies. According to the report, Bengaluru, Delhi-NCR and Chennai accounted for 62 per cent of the overall leasing of 12.6 million square feet in January-March this year. In contrast to the previous quarters, where technology corporates dominated leasing activity, BFSI firms and flexible space operators drove space take-up in the January-March quarter with a share of about 22 per cent each.
This was followed by technology corporates (20 per cent), engineering and manufacturing companies (11 per cent) and research, consulting & analytics organizations (10 per cent). Medium- to large-sized deal closures by global capability centres of BFSI corporates, Indian banks and domestic flex operators dominated leasing activity in the January-March quarter. This indicated a divergence in office absorption trends compared to previous quarters. The cumulative share of BFSI firms and flexible space operators grew from 20 per cent in October-December 2022 to 44 per cent during January-March 2023 due to a significant increase in large-sized deal closures.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East and Africa, CBRE, said, “Short-term macroeconomic pressure caused by monetary tightening, inflation, the anticipated slowdown in developed nations, and geopolitical difficulties might impact occupiers’ expansion plans and decision-making in 2023.” However, Magazine said the impact of these situations on the leasing decisions of multinational corporations has not yet been identified. “Going forward, leasing activity could pick up, especially in the second half of 2023, as India will continue to be an attractive and affordable source of high-skilled talent which will lead to corporates looking at the country for business sustenance during this period globally,” he expected.
The gross leasing in Delhi-NCR rose to 2.4 million square feet in January-March from 2.2 million square feet in the year-ago period. In Mumbai, the absorption of office space doubled to 1.6 million square feet from 0.8 million square feet. Hyderabad saw stable demand of 1.4 million square feet. Chennai witnessed a marginal increase to 2 million square feet from 1.9 million square feet. Pune saw a slight increase to 1.2 million square feet from 1.1 million square feet. In Kochi, the demand rose to 0.1 million square feet from 0.05 million square feet. However, Bengaluru saw a marginal decline to 3.5 million square feet from 3.6 million square feet.
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