Record large office space leasing is sign of revival: Realtors

With commercial leasing peaking, the real estate industry is embracing its hopes for a decade of sustained growth till 2030. During 2022, commercial leasing touched 51 million square-feet in India’s top seven markets - which was the second best historically.

According to Shishir Baijal, Chairman & Managing Director, Knight Frank India said, this momentum will continue. “Office leasing volumes in 2022 recorded at over 51 million sq. ft, which was historically the second best. Within this, IT/ITeS driven markets of Bengaluru, Hyderabad and Pune, saw more than 50 per cent of their total office leasing by occupiers taking in excess of 100,000 sq ft. The large space take up are usually for value driven services such as R&D and GCCs, which is a sign of India’s continued prowess in this area. We expect the momentum of office transaction to remain largely in line for 2023.”

The increase in large office space transactions last year indicates towards a core recovery that may drive growth in the country’s commercial market for years. During 2022, in cities like Hyderabad and Pune 53 per cent of their office space deals were over 100,000 sq.ft, while 50,000-100,000 sq.ft. deals formed 22 per cent-28 per cent, respectively, shows data.

In Bengaluru, 51 per cent deals were measuring 100,000 sq.ft. In Delhi-NCR - the second largest real estate market in the country, after Mumbai, 100,000 sq.ft. or larger deals formed 28 per cent of the total, while 31 per cent in the range of 50,000-100,000 sq.ft.

“The demand for Grade-A offices continues to strengthen with each passing quarter, including Q1 of the calendar year 2023. In fact, in cities like Gurugram, demand has outpaced supply by a significant margin. Sectors such as IT and business process management are expanding rapidly and are on a hiring spree. Additionally, many multinationals are establishing their headquarters and global capability centres (GCCs), driving demand for high-quality office space leasing,” said Mukul Sharma, head of corporate leasing at Advance India Projects. The company is witnessing increased demand for Grade-A office spaces and the retail space segment.

According to Niranjan Hiranandani, Co-founder & Managing Director, Hiranandani Group, rapid infrastructure development in key markets will continue to boost commercial activities and, consequently, the real estate demand.