India gross office leasing down 22% in Q2

Leasing volumes were at 17.4 million sq ft during the quarter.

According to a Cushman and Wakefield report, office demand in India maintained consistency in Q2 with fresh leasing dominating the overall gross leasing volumes across key markets, thereby indicating that a fairly large proportion of occupiers are proceeding with their leasing plans. 

The report added that gross leasing volume (GLV) was down by 22% in comparison to the record-high second quarter last year but grew by 11% on a quarterly basis, demonstrating resilience despite the global uncertainty and its impact on office leasing by US and European multinationals. 

Here’s more from Cushman and Wakefield:

Some large deals have been deferred but the market saw a sharp pickup in smaller-sized (<50,000 sf) deals by various occupiers across major cities. Domestic companies too contributed significantly to quarterly leasing volumes. Cities such as Bengaluru, Delhi NCR and Hyderabad witnessed strong growth as compared to the previous quarter, whereas cities such as Mumbai and Chennai witnessed a marginal quarterly dip. 

Fresh demand constituted around 69% of overall quarterly leasing activity, denoting the continued demand for quality space. At 12.1 msf, fresh leasing was up by 3% on a quarterly basis though down by around 23% from the record-high volume seen in Q2 last year. Bengaluru led fresh leasing volumes in the quarter with a 24% share followed by Delhi NCR and Hyderabad with 23% and 18% shares respectively. 

Rentals remained largely stable at a pan India level and across most cities except in Delhi NCR which saw quarterly rental growth on the back of strong demand. With supply pipeline for the current year at a healthy level coupled with near term caution on the demand side, developers/landlords are likely to hold rentals steady to retain/attract tenants. Thus, occupier-friendly conditions are likely to persist at a broader pan India level in the near-term.