Demand For Commercial Space Hits A New Peak Of 69.4 Msf, Rising By A Significant 40% Y-o-Y: Cushman & Wakefield India

National, 13^th January 2020: Gross office leasing volumes pan-India touched a phenomenal high of 69.4 msf in 2019, compared to 49.5 msf in 2018. Market demand for commercial office spaces stayed strong throughout the year. Record breaking pre-leasing activity was recorded, vacancy stayed low despite robust supply, rentals increased, and co-working space take-up rose 1.43X compared to 2018, as per the market analysis by Cushman & Wakefield India. We highlight key aspects that made 2019 a strong year for commercial leasing.

2019 WAS THE YEAR FOR FLEXIBLE WORKSPACES:

Flexible workspaces have leased more than 7 msf in 2019, a new record in the Indian commercial leasing landscape. India Inc has acknowledged the merits these spaces offer and are now a strategic imperative for occupiers as part of their real estate portfolio planning. Corporates have leased more than 100,000 seats with large operators in the country over the last two years. Delhi-NCR has the largest share of flexible working space demand at 2.4 msf (a 94% rise y-o-y) followed by Bengaluru, 1.7 msf. Flex-space demand in Pune has touched 1.0 msf this year, a 3-fold rise on an annual basis.

IT-BPM sector continued to be the largest demand driver in 2019 with a share of 32.6% in leasing activity followed by Captive / Global Capability Centres (19.8%).

CITY WISE OFFICE LEASING STATISTICS:

Gross leasing volumes: Bengaluru topped the charts at 16.47 msf of demand followed by Delhi-NCR (13.95 msf), Mumbai (13.9 msf) and Hyderabad (10.7 msf).

Net absorption: Net absorption in India rose to an all-time high of around 45 msf, a massive increase of 1.56X from 29 msf in 2018.

Vacancy rates: At 3.6%, office vacancy in Pune has dropped to the lowest in the country followed by Bengaluru (5.2%), Hyderabad (5.5%) and Chennai (9.7%).

Supply: New supply rose 47% y-o-y to 50.6 msf during the year, with Delhi-NCR accounting for the largest share at 27%, where new completions have grown by a massive 140% during the year. Meanwhile, office stock in Hyderabad has grown by 21% y-o-y with new supply of 10 msf during the year.

Pre-commitment activity: 2019 also saw a record high preleasing activity at 17.2 msf, a 7.2% y-o-y growth.  Hyderabad saw pre-commitments of 5.8 msf, garnering 34% share of the total followed by Bengaluru ay 4.7 msf (27%). Healthy pre-leasing demand was also witnessed in Delhi-NCR, Mumbai and Chennai.