Office demand sees green shoots

The resurgence of Global Capability Centers (GCCs) has helped demand for Grade A office spaces make a comeback. This has meant an improved leasing trajectory for office asset owners, who have been grappling with muted demand lately.

- Harsha Jethmalani

 

In a spillover effect of challenges facing the Indian IT sector, leasing took a beating, given that technology companies have been the top contributing tenants for Grade A offices till recently.

Nonetheless, the tide is gradually turning in favour of commercial realty. "Gross office leasing in CY23 rose by 15% year-on-year across top eight cities resulting in absorption of 59.6 million sq ft," said Viral Desai, senior executive director, occupier strategy and solutions, Knight Frank India.

On an average, rentals for the top eight cities improved by 5-7% in CY23. Desai anticipates rentals to rise within a similar range in CY24. This is likely to be driven by the rising share of GCCs in the overall leasing pie.

Higher traction in overall leasing has aided the performance of companies in the listed space. Aggregate gross leasing of key listed firms rose to a multiquarter high in Q3FY24.