GCCs Will Lead Demand For Grade A Office Space: Study

GCC demand too is likely to be on the upswing. Interestingly, as GCCs reposition themselves as knowledge and innovation centers, they are likely to account for almost 40 per cent of the Grade A office space demand -- Arpit Mehrotra, MD, Office services, Colliers - India

Hyderabad: The demand from GCCs (Global Capability Centres) will continue to witness traction and contribute to the demand expansion over the next two - three years. As GCCs reposition themselves as knowledge and innovation centres, they are likely to account for about 40 per cent of the Grade A office space demand, a Colliers report said.

The commercial real estate service provider released its latest report, “The Multifaceted Occupier Landscape of India Office Market,” at the RICS CRE FM conference. According to the report, India’s office space demand is witnessing a shift in demand from sectors, that was once dominated by technology, is now diversifying with occupiers representing multiple sectors such as engineering and manufacturing, BFSI, healthcare, consulting and flex spaces.

“In the next few years, average annual space take-up by Engineering & Manufacturing and BFSI occupiers is expected to increase by 35 per cent while tech demand is likely to stabilise. GCC demand too is likely to be on the upswing. Interestingly, as GCCs reposition themselves as knowledge and innovation centers, they are likely to account for almost 40 per cent of the Grade A office space demand. At the same time, about 30 per cent of the domestic-origin demand is likely to come from flex operators,” said Arpit Mehrotra, Managing Director, Office services, Colliers - India.

Over the next three years, Engineering & Manufacturing and BFSI occupiers are expected to lease about 11-12 million sft of office space each on an annual basis, up from eight to nine million sft each, in the past three years. These sectors will together account for about 40 per cent of the total office space demand. Flex space occupiers are likely to expand into newer geographies, accounting for 15-20 per cent of total office leasing. As technology firms continue with hybrid and distributed work model, the space uptake will eventually stabilize at around 15 million sft.

Coming to office space leased by Technology sector in micro markets of Hyderabad, such as SBD, has surpassed prominent micro markets of Bengaluru. Other micro market, Off SBD in Hyderabad has witnessed increased traction across key demand sectors.

“Delhi NCR and Hyderabad are expected to see office space demand upwards of 10 million sft in the next few years. Mumbai, Pune and Chennai too are likely to witness annual demand uptick by 20-30 per cent. Furthermore, we anticipate healthy traction in office markets of relatively smaller cities such as Bhubaneshwar, Chandigarh, Coimbatore, Indore, Jaipur, Kochi,” said Vimal Nadar, Head - Research, Colliers India.