Hyderabad records growth in office leasing

The city witnessed about 4 per cent raise in leasing volume in 2017

By Author  |  Business Bureau  |  Published: 27th Jan 2018  12:38 am
The demand for office leasing was driven by the expansion of large scale technology companies like Deloitte, Qualcomm, Microsoft, etc. —Photo: Surya Sridhar

Hyderabad: Followed by a record year in the city’s office leasing market in 2016, Hyderabad witnessed about 4 per cent raise in leasing volume at 5.8 million sq ft (0.4 million sq m) in 2017. The demand was driven by the expansion of large scale technology companies like Deloitte, Qualcomm, Microsoft, etc. The city also witnessed an additional 0.8 million sq ft (0.07 million sq m) of pre-commitments. Hyderabad market is poised to grow steadily in coming years and to be complemented by huge Grade A supply, according to real estate services company Colliers International.

“The occupier demand and office rentals is expected to remain stable this year. Tenants will continue to be cost-conscious, and should consider current and upcoming social infrastructure of the location, connectivity and overall benefits prior to securing the workspaces”, says Hari Prakash, senior general manager, Office Services (Hyderabad), Colliers International India. In 2017, the city’s Secondary Business Districts (SBDs) continued to be the preferred destination for technology occupiers and the micromarket accounted for a 91 per cent share in total leasing.

Other micromarkets, such as Central Business District (CBD), Off CBD and Peripheral Business District (PBD) accounted each 3 per cent share of total leasing. Being a well-established technology hub with increasing quality Grade A office development, the SBD micromarket should remain the choice of occupiers eyeing for vast talent pool in the upcoming years. Regardless of the concerns about automation and layoffs, the technology and e-commerce players like Google, Deloitte, Accenture, Amazon and alike will continue to expand their footprint in the city. With co-working / shared spaces gaining thrust in Hyderabad among startups, small companies and even with large companies for specific project needs, the city is likely to become next target for shared office spaces.

Pan-India trend

The year 2017 witnessed a pan-India leasing volume of about 42.8 million sq ft (3.9 million sq m), excluding renewals and pre-commitments, which is marginally up from 2016 absorption level (41.6 million sq ft in 2016). The demand for Grade A office space was primarily driven by technology companies followed by engineering, manufacturing, banking and finance, and co-working operators. Many technology and e-commerce companies are exploring expansion in Tier II and III cities due to cheaper resource and rising cost of power. Given the government’s push for smart cities development, Colliers believes that firms should consider expanding in the cities where the state governments intend to spur growth by offering more fiscal and non-fiscal incentives and building infrastructure projects such as airports and railways.

“One of the biggest shifts in workplace strategies in India is likely to be the improvement in the degree of flexibility offered to occupiers by the developers. We expect these large players to compete against traditional offices to target major corporates besides focusing on small-and-medium enterprises”, says Surabhi Arora, senior associate director, Research, Colliers International India.