Indian companies have overtaken American firms in gross leasing of office space for the first time, with almost a 50 percent share in the total demand, according to real estate services company CBRE India.
In its report released on Thursday, CBRE said that the gross leasing of office space rose 40 percent in 2022 to 56.6 million square feet across nine major cities from 40.5 million square feet in the previous year.
Out of the total absorption of office space in 2022, 27.73 million square feet area was leased by domestic firms while 20.37 million square feet by American companies, according to CBRE.
The total gross leasing of office space in 2022 was the second-highest leasing activity ever after it touched the peak in 2019 with a 65 million square feet area.
"In a first, domestic firms overtook American firms in annual leasing, accounting for nearly half of the leasing share in 2022, mainly led by flexible space operators, technology corporates and BFSI firms," CBRE said.
Bengaluru, Delhi-NCR and Mumbai dominated the absorption by domestic firms, it added.
Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE, said, "With a sustained recovery in leasing, moderating vacancy levels and persistent demand for investment-grade assets, the rental recovery continued across cities throughout 2022."
With the relaxation of COVID-19 restrictions, he said the pent-up demand and a gradual acceleration of return-to-office plans by occupiers propelled leasing momentum.
In line with the trends witnessed in the past, Magazine said a strong supply pipeline and continued occupier interest in investment-grade buildings by leading developers and institutional owners in core locations are likely to lead to an increase in development completions in 2023.
"With a few challenges emerging across developed economies, the full impact of these risks on global corporates' leasing decisions is yet undetermined," he said.
As India remains an attractive, cost-effective destination with a skilled talent pool, Magazine said the global firms will look up to India to optimise their operations and absorption levels could still normalise to levels lower than in 2022.
According to the data, technology corporates drove leasing with a share of 29 percent, followed by flexible space operators (14 percent), engineering & manufacturing companies (13 percent), BFSI firms (13 percent), and research, consulting & analytics organisations (7 percent).
A fresh supply of office space marginally increased from 49.7 million square feet in 2021 to touch 50.6 million square feet in 2022, CBRE said.
