Increase In Demand For Under-construction Office Projects

Builders and brokers claim that tenants are in a hurry to sign up for office spaces even before it hits the market. This is happening to due to a rise in commercial rentals in India’s top cities.

Property advisor firm – CRBE has compiled data that clearly shows a total of 8 million sq.ft. is expected to come up this year in Bengaluru, 50% of which has already been pre-leased. Pune and Hyderabad which are in the National Capital Regions have seen 20% of new supply has already has takers.

42 million sq.ft. office space was absorbed in 2017 as said by CBRE, from this 29 million sq.ft. were fresh supply. “This constrained availability of ready-to-move-in space, and increasing rentals have resulted in a number of corporates pre-committing to space in under-construction properties,” said Ram Chandnani, Managing Director (Advisory & Transaction Services India), CBRE South Asia Ltd.

K Raheja Corp have noticed a rising interest from technology, banking and financial services firms and pharmaceutical companies.

Pre-commiting space helps in “negotiating favourable rental terms, block contiguous space for future expansion and appropriately stagger expansion as per the development schedule,” Chandnani of CBRE added.

According to Vinod Rohira, Managing Director (Commercial Real Estate & REIT), K Raheja Corp, Mumbai and Pune witnessed 50-60% of fresh supply in the coming 12-18 months that have been leased out already. During this period, a total of 6 million sq.ft. of office is expected to be delivered in these cities.

“In certain micro-markets, where there is limited supply, we have seen a surge of pre-commitments. Customers want to lock in space before it goes away. People fear that the new supply would be not catching up with the demand,” Rohira said.

Around 30 million sq.ft. of office space in Mumbai, Pune, Hyderabad and Chennai is operated by K Raheja Corp.