Hyderabad among top three cities in office space absorption

Hyderabad: The latest office report for the second quarter of 2022, from leading real estate consulting firm CBRE South Asia Pvt. Ltd, has found Hyderabad among the top three cities in India, with office space absorption at 2.6 million square feet in Q2 2022.

The report findings also highlighted strong demand for office space in India across major Indian cities in Q2 2022, as leasing activity grew by 61 per cent quarter on quarter to touch the highest-ever quarterly office space absorption of 18.2 million sq.ft.

The space leasing was mainly driven by engineering and manufacturing firms, having a share of about 53 per cent, followed by life sciences (16%) and Banking, Financial Services and Insurance firms (15%).

Small-sized deals dominated the transaction activity; 69 per cent of the absorption during the quarter was recorded in SEZ spaces, 22 per cent in IT spaces and, nine per cent in non-IT spaces. On the supply side, project completions were dominated by SEZ spaces having a share of 74 per cent followed by IT at 17% and non-IT at 9%, the report said.

Hyderabad also witnessed a few major transactions with Qualcomm leasing 1.1 million sq. ft. in CommerZone Wing 1, PwC leasing about 0.35 million sq. ft. in My Home Twitza and Legato leasing about 0.33 million sq. ft. in aVance Business Hub (H9).

Among the major cities, on an H1 basis, office absorption stood at ~29.5 million sq. ft., recording a growth of 157 percent year on year. In H1 2022, about 26.1 million sq. ft. of new completions were witnessed – increasing by 26 per cent Y-o-Y. Bengaluru, Delhi-NCR and Hyderabad dominated absorption during the quarter, accounting for almost two-thirds of the transaction activity.

“It is evident from the leasing activity that employees are resuming office with a flexible approach. The supply addition in Hyderabad was particularly notable, as the city’s stock crossed 100 million sq. ft. during the quarter,” CBRE chairman and CEO (India, South-East Asia, Middle East & Africa) Anshuman Magazine said.

Other observations

• Bengaluru, Delhi-NCR and Hyderabad will continue to drive transaction activity in 2022. Mumbai, Pune and Chennai will also witness improved leasing volumes

• Space take-up will be attributable to release of pent-up demand and expansion & consolidation requirements of occupiers

Key trends:

• Renewals and renegotiations continue to remain the preferred short-term portfolio strategies of occupiers

• Increased adoption of activity-based working, targeted mobility, and hot-desking was witnessed post the pandemic and is expected to grow further

• Technology would be key to implementing hybrid working going forward, indicating of increasing investment in WorkTech.

• Flexible work patterns have increased in prevalence post the pandemic. However, several occupiers are yet to formally define hybrid working and formulate the requisite policies and guidelines for their employees.

• The use of flexible spaces – including managed offices and coworking spaces – in corporate real estate portfolios would continue to become more prominent in the long term.