Real Estate

Office space crunch in technology driven cities to remain: Colliers Intl

Anil Urs Bengaluru | Updated on January 12, 2018 Published on January 17, 2017

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Hyderabad, Bengaluru, Pune to see upward pressure on rents for grade A buildings

The office space demand-supply gap is likely to remain a concern in the technology driven markets like Hyderabad, Bengaluru and Pune.

“In the short-term, the tenant appetite for higher quality offices has been reflected in new leases being executed at above market rates in select grade A buildings in all the cities,” said Surabhi Arora, Senior Associate Director, Research at Colliers International.

“Expecting a similar trend in 2017 as well, we cannot rule out the possibility of upward pressure on rents at least in the first-half of the year in most of the preferred markets for grade A buildings,” she added.

Bengaluru remained on a high growth trajectory and maintained its leading status among the key cities by retaining a 31 per cent share, followed by Delhi-NCR, which represented 18 per cent of the total occupier demand.

India recorded 41.6 million sq ft (3.9 million sq metres) of gross office leasing transactions in 2016. With a modest increase of 3.5 per cent over 2015, this indicates a robust occupier market.

Hyderabad and Chennai stood at 13 per cent each, while Mumbai, Pune and Kolkata accounted for 14 per cent, 9 per cent and 2 per cent, respectively of the overall leasing volume.

In 2016, 27.2 million sq ft (2.53 million square metres) of grade A new supply was released into the market. “This was insufficient to cope with the very strong demand, especially in markets such as Bengaluru, Hyderabad, and Pune, and resulted in an increase in office rents in most of the micromarkets in these cities,” said Arora.

Published on January 17, 2017
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