The momentum of commercial real estate absorption continues to strengthen as the total number of office leasing transaction across top 8 cities of India have risen 60% over the past five years.
While only about 820 lease transactions in grade A buildings were recorded in 2013, the number reached close to 1,300 in 2017, showed JLL India data. Average size of transactions has, however, seen a decline. The size per transaction has moved down from an average of 31,000 sq ft in 2013 to 27,000 sq ft 2017. This is significant as it defines the way office space is actually getting consumed.
Given the fact that IT/ ITeS continues to transactions, this decline signals a trend of rationalization of space uptake through consolidation and workplace strategy implementations. “Indian office transaction is at an interesting cusp. We have been experiencing a growth in overall leasing activities. While net absorption has remained stable for the past few years, we expect it to be at around 32 million sq ft by end of 2018 and be close to 35 million sq ft in the subsequent two years till the end of 2020,” said Ramesh Nair, CEO and Country Head, JLL India.
Last year, net leasing rose to 29 million sq ft and the total number of transactions were close to 60% higher than 2013 and was about 7% year-on-year over 2016. The big jump, however, was seen in the periods of 2014 and 2015 which was largely due to the stability brought in by the then newly elected government that had come to power with a clear majority.
Nair expects to see the pie for co-working and flexible office space increase over the next few years, while IT/ ITeS will remain the largest leasing group.