Gross leasing activity touched 50 million sqft across the country in 2018, driven by buoyant demand in Bengaluru and Delhi-NCR, says an industry report. According to property consultant Colliers International, gross leasing increased 17 per cent, highest in eight years, as occupiers continued to expand and consolidate. But it notes that the average lease area has declined 18 per cent from 45,200 sqft in 2016 to 37,100 sqft in 2018, despite leasing at an all-time high in the past eight years.
"Although the number of transactions has increased, this development suggests shrinking workplaces as a result of increased efficiencies with improved per sqft occupancy. We expect net absorption to rise year-on-year, albeit at a slower pace against the growing need for workspace efficiency and cost," it said in a report Monday. As per the report, the top three sectors contributing to gross leasing are IT-ITeS with 43 per cent, flexible workplaces (14 per cent) and BFSI at 12 per cent.
Overall rental value also increased by 3 per cent across major cities over 2017 thanks to buoyant leasing demand coupled with a 14 per cent decline in new supply. Hyderabad saw the highest increase in rental value at 8 per cent followed by Bengaluru at 5 per cent. "New completions were noted at 26.4 million sqft with Bengaluru noting the highest infusion followed by Pune. We expect commercial supply to rise in 2019 along with the rentals which are expected to strengthen owing to sustained occupier interest from technology and flexible workplace operators," says the report.
The occupiers should adopt a flexible and core occupancy model that allows them to commit to fixed realty space for their core operations while keeping flexibility to alter their realty portfolio depending on their operational requirement, says the report. The report expects net absorption growth to taper in 2019 as corporates are moving towards framing workplace strategies defined to optimise space usage and people performance.
(With inputs from agencies.)