South Cities (Bengaluru, Hyderabad and Chennai) Clock in 30 mn sf of Office Gross Absorption in 2019: Colliers International India

BENGALURU, India, Dec. 24, 2019 /PRNewswire/ -- During 2019, Bengaluru, Hyderabad and Chennai saw a 23% rise in demand for office space over last year, with gross absorption at 30.6 million sq feet. This strong growth demand is led by expansionary activity by occupiers in the technology and IT-BPM space, ramped-up by flexible workspace players and investments of companies in global capability centers.

"As per our expectations, a sustained leasing momentum, coupled with continued demand from technology and flexible workspace operators once again helped Bengaluru secure the number 1 position in terms of overall leasing in 2019. Over the last few years, Hyderabad has seen unprecedented growth in commercial leasing activities owing to infrastructural push from the government, strong demand from occupiers and attractive rentals. The city has been a major location for global investors who are scouting for ready stock with high yield rates," says Arpit Mehrotra, Senior Director, Office Services (Bengaluru & Hyderabad) at Colliers International India.

Bengaluru continued to be the market leader with gross absorption of about 15 million sq feet in 2019, an increase of 6% from 2018. Technology and IT-BPM sector accounted for 39% of the total leasing during the year, followed by the engineering and manufacturing segment's share at 16% and the flexible workspace share at 15%. During the year, Bengaluru saw supply infusion of 10.9 million feet.

Source: Colliers International India

Hyderabad witnessed 9.5 million sq feet of gross absorption during 2019 registering a 38% yoy growth in office space demand when compared to 2018. This new peak in office demand is driven by technology and flexible workspace players accounting for 51% and 32% respectively, during 2019. Interestingly, the flexible workspace players have ramped-up operations in the city with almost a four-fold increase in leasing activity during 2019 compared to previous year.

"2019 has ended on a high note with Chennai and Hyderabad hitting an all-time high. Vacancies in the south cities hovering in single digits, signaling strong occupier sentiments. Overall, this year should see demand of about 52 million sq feet, again a new high, as occupiers continue to remain enthused about India. We expect technology companies to continue their strong streak in 2020, with flexible workspaces slowing their expansion phase," said Megha Maan, Senior Associate Director, Research, Colliers International India.

Chennai's office space absorption rose by 56% yoy during 2019, touching 6.1 million sq feet. In the year 2019, the city witnessed a new peak in office space absorption after a down trend since 2012. Majority demand was led by the IT-BPM sector accounting for 55% share in gross absorption number. This is followed by flexible workspace players with about 1.0 million sq feet, accounting for 15% of the overall gross absorption.     

"Office space absorption touched new heights and with overall city vacancy at sub 10% rates, 2019 has been a landmark year for the asset class.  Continuing demand for expansion in the city, increased number of large size (100,000 sq ft) transactions and robust leasing contributed by the peripheral markets (Ambattur and post toll OMR) were some of the key factors contributing to about 6 mn sq ft of gross absorption.  IT SEZs, as anticipated saw robust leasing across all micromarkets and was also instrumental in pushing leasing activity to close the year at a record high," said Shaju Thomas, Senior Director, Office Services (Chennai) at Colliers International India.

About Colliers International Group Inc.

Colliers International (NASDAQ: CIGI) (TSX: CIGI) is a leading global real estate services and investment management company. With operations in 68 countries, our 14,000 enterprising people work collaboratively to provide expert advice and services to maximize the value of property for real estate occupiers, owners and investors. For more than 20 years, our experienced leadership team, owning approximately 40% of our equity, have delivered industry-leading investment returns for shareholders. In 2018, corporate revenues were $2.8 billion ($3.3 billion including affiliates), with more than $26 billion of assets under management.

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