Corporates are locking in large office spaces across the country as they revive expansion plans and prepare for the return of employees to offices at full strength after Covid-19 cases dropped sharply across the country.
Large technology, consulting, and financial services firms like Google, Deloitte, Amazon, Qualcomm and Wells Fargo have pre-committed large office space across major cities in the first quarter of the calendar year.
"Office expansion plans and positive sentiment for occupiers have been observed across cities. A jump in freshly leased spaces and pre-commitments, especially across the top markets, indicates confidence and healthy momentum in the office market growth for the coming quarters," said Badal Yagnik, MD, Tenant Representation, Cushman & Wakefield India.
At the pan-India level, pre-commitment of office space stands at 3.18 msf, which is 77% higher YoY, indicating that occupiers are scouting for space in quality supply.
Out of the top 8 cities, the Bengaluru market saw maximum pre-commitments, followed by Chennai and Pune.
In Bengaluru, pre-leasing accounted for 30% of overall gross leasing activity in the quarter, indicating a recovery in occupier sentiments.
The IT-BPM sector accounted for a higher share (37%) of leased space, followed by engineering, manufacturing, telecom and media sectors with contributions of 22% and 16%, respectively.
"We see that demand will outstrip supply in major markets, and we will be back to our 2019 numbers this year if there are no more covid scares," said Juggy Marwaha, CEO, Prestige Office Ventures.
With new supply hitting markets for two quarters now, occupiers are likely to take advantage of the largely stabilised rental rates and firm up expansion plans more.
"There is no speculative construction as builders are focused on the completion of existing projects. The pre-leasing commitments have been largely intact and there have been limited downsizing activities by larger corporations,” said Bijay Agarwal, MD, Salarpuria Sattva.
Leasing activity also saw a sharp jump, led by large pre-commitments and growth in fresh leasing. The January-March Q1 2022 pan-India net absorption stood at 6.7 msf, which is 95% higher than Q1 2021.
Cushman & Wakefield said cities like Delhi NCR, Bengaluru, and Pune made up about 68% of the total net absorption.
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This article originally appeared in The Economic Times on Apr 18, 2022.