Despite a slowdown in the overall economy, the office market has continued to perform well in 2017. Colliers International in a report states that with about 10 million sq ft (0.9 million sq m) of office leasing in Q3, gross absorption totaled around 28.9 million sq ft (2.7 million sq m) over the first nine months. Although the number represents a marginal decline of about 1 per cent from last year's absorption during the same period, leasing momentum can pick up in Q4 2017.
Bengaluru has remained the frontrunner in office leasing with a 31 per cent share of overall demand followed by NCR (25 per cent), Hyderabad and Chennai (12 per cent each), Mumbai (10 per cent), Pune (8 per cent) and Kolkata (2 per cent). With an 8 per cent share of total leasing volume in Q3 2017, coworking operators are making their presence felt in the market. "Overall, the commercial market will remain stable despite the economic slowdown and increasing concern about disruption from artificial intelligence, automation and stringent data security laws", says Ritesh Sachdev, Senior Executive Director, Occupier Services, Colliers International India.
While the traditional demand drivers of the Indian office market, technology occupiers represented 39 per cent of total absorption. Banking, Financial Services and Insurance (BFSI) also formed the bulk of transactions and accounted for 17 per cent of total absorption. On the supply side, about 90 million sq ft is under various stages of construction, which according to the report is likely to increase the current total stock by 16 per cent in the next three years.
In Q3 2017, Bengaluru witnessed gross absorption of 3.0 million sq ft (0.27 million sq m) indicating a drop of 5 per cent q-o-q. However, the city recorded gross absorption of 10 million sq ft (0.9 million sq m) over the first nine months, representing a considerable increase of 16.5 per cent over the same period last year.
In Q3 2017, total gross leasing volume amounted to 0.26 million sq ft (0.02 million sq m) representing a significant increase of 30 per cent in comparison to Q3 2016.
The market recorded about 0.6 million sq ft (0.05 million sq m) of gross absorption which was 20 per cent up from the previous quarter.
With 1.58 million sq ft of gross absorption in Q3, 2017, Gurugram was the most active office market in NCR. Gross absorption over the first nine months accounted to 3.3 million sq ft (0.3 million sq m) which is about 14 per cent up from the same period in 2016.
During Q3 2017, commercial market demand in Kolkata was in line with Q1 and Q2 absorption numbers, leading to a gross absorption of 0.2 million sq ft (18,150 sq m).
Gross office absorption amounted to only 1.0 million sq ft (0.1 million sq m) in Q3 2017, making it 4.0 million sq ft (0.4 million sq ft) YTD, which is similar to the same period last year.