The number of leasing transactions for prime office space annually has increased by 56 per cent over the last five years in eight major cities but the average size of the deal in volume terms fell by 10 per cent, according to property consultant JLL India. In its study, JLL has found that 1,283 leasing transactions were closed last year in Grade A office buildings in the eight cities as against 823 during 2013.
These seven cities are Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Chennai and Ahmedabad. During 2017, the net leasing of office space stood at 29 million sq ft. However, the consultant said the average size of the leasing transactions declined from 30,938 sq ft in 2013 to 27,942 sq ft last year as corporates are exercising workplace rationalisation and consolidations.
Commenting on the commercial market, JLL India CEO and country head Ramesh Nair said, 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 last few years, Nair said leasing is expected to rise this year at about 32 million sq ft and about 35 million sq ft annually in 2019 and 2020.
Over the next few years, we can expect to see the pie for co-working and flexible office space increase, while IT/ ITeS will remain the largest leasing group, Nair said. Other sectors impacting the office absorption for the next three years would be e-commerce and related businesses, BFSI and fintech companies and business consulting and services firms, he added.
E-commerce and co-working segments have radically changed the concept of office space utilisation in the last couple of years, JLL India said. There is a serious consideration towards creating flexible workspaces and new age collaborative space.
One of the key drivers of the surge in corporate demand for flexible spaces is plug-and-play simplicity, particularly for larger companies. The ability to move in and out of an office at short notice, avoid complicated contract negotiations and fit-out work is a convenient option for many occupiers, the report said.