Co-working, poster boy of commercial real estate market in 2018

Co-working, poster boy of commercial real estate market in 2018
28/12/2018 , by , in News/Views

The year 2018 saw demand for Grade A office stock grow. While co-working emerged as the new poster boy of commercial real estate, logistics and warehousing saw significant growth. Despite minimal new supply in 2018, the retail real estate sector held its own on the back of conducive FDI norms.

Leasing activity: As per Cushman & Wakefield estimates gross leasing activity is expected close to 50 mnsq ft. This has been supported by robust space take-up by IT-BPM sector with global captive centres clocking impressive numbers as well, and the co-working revolution consolidating its gains with a strong showing during the year.

Total investments Of the total investments in the office space during the year, approximately 77 percent of the investors were of foreign origin, cementing foreign investors’ trust in the Indian commercial space. In terms of cities, 42 percent of the total inflows into the office sector were seen in Mumbai, followed by Hyderabad that had a 35 percent share. Bengaluru distantly followed Hyderabad with a share of 6 percent of the inflows in Jan-Sept 2018, as per Cushman & Wakefield estimates.

The year 2018 is likely to close with office inflows of $3.5 billion subject to closure of some key transactions with investors like Blackstone, GIC and CPPIB in Mumbai, and Hyderabad.

Co-working/flex spaces are here to stay and operators are smartly aligning themselves to target large enterprises and transform in to managed space operators while retaining the form for start-ups and smaller firms.

The stock of flexible space market in India increased from nearly 10 million sqft in 2017 to about 15 million sqft by the third quarter of 2018, making it among the biggest markets in the APAC region, says a new report.

Co-working operators are expected to lease about 7-9 million sqft by 2020 from over 5 million sqft estimated this year, according to property consultant CBRE. Bengaluru and Delhi-NCR were the largest markets for flexible spaces in India, with a combined share of almost 55 percent in overall leasing by flexible space operators.

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