With nearly 300% Y-o-Y growth, Pune’s office leasing led by flex space operators and technology firms in Q1 2022

Pune (P&V News Service) : CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the findings of its latest office report ‘CBRE India Office Figures Q1 2022’. The report observed that the office sector in India continued to witness a robust recovery in Q1 2022, as leasing activity grew by 97% Y-o-Y to touch 11.4 million sq. ft.

Total office leasing for the quarter was observed at 1.1million sq. ft.in Pune, led by flexible space operators (32%), technology corporates (23%) and BFSI firms (18%).Pune and Chennai, followed by Delhi-NCR and Bangalore, also dominated large-sized (more than 100,000 sq. ft.) deal closures.

Overall office supply witnessed in Q1 2022 was around 9.4 million sq. ft. – a slight dip of around 11% Y-o-Y and 41% Q-o-Q. Bangalore, Hyderabad and Chennai dominated development completions, accounting for a cumulative share of about 70%. Supply was driven by non-SEZ developments with a share of around 83%.

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE said, “With the government’s evolving COVID-19 protocols and the recovery in office leasing in 2021, we expect the positive momentum to further strengthen in 2022.

We continue to witness a pickup in long-term decision-making by occupiers, aided by‘return-to-work’ strategies,thereby accelerating project completions.”

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India said, “As economic recovery continues to gain momentum, we expect the increase in leasing activity to bring a new focus on large-sized and high-quality buildings by developers to differentiate their assets and attract occupiers.

We also expect large institutional players to continue with greenfield investments via JVs / partnerships / platforms or brownfield investments via REITs, which in turn would also boost the upcoming supply in the coming years.”

Anuj Dhody, Executive Director, City Head – Pune, Advisory & Transactions Services, CBRE India said,“Observing a strong leasing trend, Pune continues to drive occupier interest this quarter.As businesses implement ‘return to office’ strategies,we expect the city to drive stronger transaction activity in 2022.”

Other observations

Supply:

·        Supply would continue to be dominated by Bangalore, Hyderabad and Delhi-NCR, which would drive close to 70% of the completions in 2022.

·        SEZ supply would mostly be led by Hyderabad and Delhi-NCR, while non-SEZ supply would be led by Bangalore, followed by Delhi-NCR and Hyderabad.

Office space take-up:

·        The share of large-sized deals remained similar to previous quarter at about 7%, while the share of medium- to large-sized (more than 10,000 sq. ft.) deals witnessed a rise.

·        As in 2021, Bangalore, Hyderabad and Delhi-NCR are expected to continue to drive transaction activity in 2022.

Key trends:

·        Renewals, renegotiations and addition of flexibility options are likely to be the focus of occupiers in the short term.

·        We expect to see clearer evidence emerging in any corporates’ intended shift towards hybrid working policies, with several occupiers planning to implement policies allowing office-based working with the option of working remotely.

·        With an increased focus on wellness, user experience and sustainability, occupiers are expected to demand more sophisticated and tech-enhanced real estate offerings.

·        Environmental & sustainability issues, such as carbon emissions, the use of sustainable materials, energy efficiency and wellness enhancements are likely to become ever more important to occupiers and owners of office buildings.