Small spaces drive office lease transactions in September quarter

Office leasing transactions in the September quarter were driven by demand for small spaces ranging from less than 10,000 square feet to 50,000 square feet, further evidence of the ongoing depression in the commercial real estate sector.

In its update for the quarter, property consultant CBRE said that take-up of small and medium-sized spaces accounted for an overwhelming 86 per cent of the transactions, on par with that seen in the previous quarter. The share of large-sized deals of more than 1 lakh square feet saw a marginal uptick of 1 percentage point.

• Also read: India’s office space demand hits 18-month high in Q3: JLL India

Most of the large deals that occurred were in Bengaluru and Hyderabad, while there were a few in Mumbai and Pune as well. Mumbai, in fact, saw the highest leasing volume in the quarter closely followed by Bengaluru.

While leasing in the financial capital was driven by financial services companies, in the electronic city it was technology companies.

Some of the large deals in Mumbai in the quarter were - a financial services company leasing 1.6 lakh square feet of space in Oberoi Realty’s Commerz III, Upgrad Education taking up 1.2 lakh square feet space in Bandra Kurla Complex and HDFC leasing 1 lakh square feet space in One International Center-III.

• Also read: Gross office leasing dips 13% q-o-q in Q3 of 2023; Mumbai tops the charts

The total volume of leasing in the quarter across nine major cities in the country, according to CBRE data, was 15.8 million square feet, up by a third from year ago.

The total new supply of office space nearly doubled to 19.3 million square feet with most of the new supply coming in Bengaluru, Hyderabad and Pune, accounting for 77 per cent of the total.

Most of the developments have been taking place in non-SEZ areas, as the government still has to provide clarity on denotification of SEZ areas.

• Also read: India’s top 7 cities expected to sustain high demand for office spaces: Report

According to Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, return-to-office plans are gaining traction as employers and builders are putting more thought into creating “experiential workplaces.” 

“This year, we anticipate a surge in investments in workplace technology, improved coordination across functions, and a heightened emphasis on transforming workspaces,” he added.

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