India’s Office Market Upsurge

India’s Office Market Upsurge
Jun 2018 , by , in ARTICLE

As per CBRE Research, compared with Q1 2017, absorption increases by 25% in Q1 2018 and almost 10 million square feet of new supply enters the market.


CBRE South Asia Pvt. Ltd, latest India Office MarketView – Q1 2018 report states that the office leasing activity across India’s top 8 markets was at an all-time high in the first quarter of the year.


Close to 11 mn sq. ft. of space take-up was recorded – a 25% increase from Q1 2017. This is a departure from the norm as the first quarter of the year usually witnesses subdued activity because corporates are still finalizing their business strategies. During the January to March period, Bangalore reported the highest demand for office space and accounted for more than the combined share of the markets of Delhi-NCR, Mumbai and Hyderabad.


In line with the increasing demand, supply addition more than tripled to touch 9.7 mn sq. ft. during the review period, indicating continued occupier interest for quality office spaces across the country. More than 80% of this new supply was in Bangalore, Mumbai, Chennai and Delhi-NCR.


Tech corporates led office space take-up during the quarter with a 25% share, while BFSI firms garnered a 24% share. The share of e-commerce firms rose to 15%, thanks to a few large-sized deals by leading global and domestic players. Other sectors that contributed to leasing activity were engineering and manufacturing, research, consulting and analytics and co-working/business centre operators. Pre-commitments continue to be the primary mode of transaction, especially in cities such as Bangalore that had a dearth of quality ready-to-move-in supply.


During the quarter, 45% of all the transactions were for small-sized spaces while mid-sized transactions accounted for a 42% share. There were a few large-sized deals, most of which were recorded in Bangalore, followed by a few in Mumbai, Delhi-NCR, Chennai and Hyderabad.




  • Gurgaon dominated leasing activity in the city
  • New supply consisted of a few medium-sized non-IT developments in Gurgaon and an SEZ development along the Noida Expressway
  • Leasing activity was primarily driven by the tech sector, followed by corporates from the research, consulting and analytics, and BFSI sectors



  • Quarterly leasing activity witnessed an uptick in the city
  • More than half of the leasing activity was in the Secondary Business District (SBD) and the Peripheral Business District (PBD) of Powai and Vikhroli
  • BFSI firms and co-working operators dominated leasing activity, followed by firms from infrastructure, real estate and logistics
  • Rental values remained stable during the quarter



  • The city continued to lead the country’s office demand and supply activity
  • Quarterly leasing increased significantly due to culmination of pre-commitments and space take-up in recently completed developments
  • Leasing activity was primarily driven by BFSI corporates followed by e-commerce, research, consulting and analytics, and tech firms
  • Rental values across key markets in the city appreciated marginally during the quarter



  • Transaction activity was led by small-sized deals, mainly by corporates looking to consolidate/ relocate operations
  • Quarterly leasing activity declined marginally while supply witnessed an uptick
  • Tech corporates continued to lead demand, in the city
  • Rents increased by about 5-7% in IT buildings in OMR Zone I, due to low vacancies and sustained corporate interest



  • After robust activity last year, the city witnessed a marginal decline in leasing activity during the quarter
  • Supply addition was limited to one medium-sized development in the extended IT corridor
  • Sustained occupier interest resulted in a majority of the quarterly leasing activity being concentrated in the IT corridor of the city
  • Tech firms, followed by engineering and manufacturing and healthcare firms, dominated leasing activity
  • Rental values increased across all micro-markets, thanks to continued occupier interest and shortage of new supply



  • Supply addition increased on a quarterly basis in the city while leasing activity declined marginally
  • Tech firms continued to dominate space take-up, followed by engineering and manufacturing companies
  • PBD accounted for more than half of the city’s leasing activity during the review period
  • Select micro-markets in the city witnessed quarterly rental growth



  • Quarterly leasing activity and new supply addition declined marginally
  • Rentals remained stable across all micro-markets
  • Demand was largely driven by occupiers from the engineering & manufacturing, and telecommunication sectors, followed by BFSI and co-working firms
  • Leasing activity was primarily concentrated in EM Bypass and Ruby Connector in SBD and Salt Lake V and Rajarhat in PBD



  • The city witnessed a marginal increase in leasing activity
  • Rentals remained stable during the quarter
  • Demand was driven by tech firms


As the year progresses, several themes will dictate the dynamics of the office market in the country. With corporates looking to expand or consolidate their operations, leasing activity is expected to remain stable in the short term. Increased focus on space utilization ratios and innovation in workplace strategies is anticipated to lead to an uptick in demand for co-working spaces.


Another emerging trend is the growing interest of occupiers looking to lease space in tier II cities such as Nasik, Jaipur, Mangalore, Trivandrum and Indore. These smaller towns offer quality space at lower rentals supported by good physical and social infrastructure and are well connected to the nearby larger cities.


A strong first quarter is indicative of the sustained growth of India’s office market across key cities. While the share of tech firms in overall demand could drop further as technology disruptions impact headcount growth, the increasing share of other sectors including BFSI, engineering and manufacturing and research and consulting will balance the overall market performance in the long term.


Over the next few quarters, there will be a supply-demand gap across several key cities due to supply slippages, leading to an increase in rentals. In some cities, this rental growth will be witnessed across all micro-markets, while in others it will be in core locations only.


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