Office space leasing to cross 100 mn sq ft during 2018-20: JLL India
Office space leasing is expected to grow by an average 8 per cent to cross 100 million sq ft by 2020 in eight top cities on the back of robust demand from corporates, according to property consultant JLL India. The net absorption of office space stood at 28.7 million sq ft in 2017 calendar year and the consultant has pegged absorption at 30.2 million sq ft in 2018, 33.6 million sq ft in 2019 and 36.5 million sq ft in 2020. Unlike housing sector, commercial real estate (office and retail properties) is witnessing reasonable demand and attracting huge institutional investment.
In its latest report, JLL India said that “net absorption of office space is expected to cross 100 million sq ft by end of 2020 in the top eight cities of India”. These eight cities are — Mumbai, Delhi–NCR, Bengaluru, Chennai, Hyderabad, Pune, Ahmedabad, Kolkata. “Office space absorption is expected to grow at approximately at a CAGR (compounded annual growth rate) of 8 per cent over 2017,” it added. JLL said that the office market has been experiencing robust demand. The consultant pointed out that net absorption had been witnessing year–on–year decline between the periods of 2015–17 dropping below the psychological barriers.
“The office space absorption growth is directly dependent and indicative of economic factors like the growth in GDP, access to institutional capital and stability in the market,” JLL India CEO & Country Head Ramesh Nair said. The demand for office space is expected to come both from domestic as well as global companies. “Our estimates of growth sectors impacting the office absorption for the next three years are IT/ITeS, e-Commerce and related businesses, BFSI and FinTech companies and business consulting and services firms,” he said.
On the supply side, JLL India said the estimated supply for the next three years is 116 million sq ft, growing at a CAGR of 15 per cent from 2017–2020. “A stability of vacancy indicates a stability of rentals in most locations as well, we expect rentals to grow between 5 -8 per cent year–on–year albeit only in high demand micro – markets of SBD (secondary business districts) and IT corridors of in key markets. The rest of the markets are expected to hold fort to the current values,” JLL said.