Demand for India office space set to rise

KUALA LUMPUR: Office occupiers in India are more optimistic than they have been in recent months, with the majority planning to take on additional office space, according to a survey of 200 office occupiers conducted by real estate consultancy DTZ.

Office space demand during the next 12 months is expected to inch closer to the peak levels of 22 million sq ft seen in 2007, across the three primary office markets of Delhi NCR, Mumbai and Bengaluru, said DTZ in a research report dated Dec 21 on the results of the survey.

Survey results indicate that most of this demand will be seen during the next three to six months. Smaller sized deals will be more common with the volume of transactions set to increase.

With an overall positive outlook on office demand, survey results show that a majority of occupiers expect rents to rise over the next six to 18 months.

Expansion of existing facilities to accommodate organic growth is the primary reason for this rise in demand for office space. This has set the pace for office movement by occupiers to either larger premises or a need for additional space.

"Occupiers are keen to explore new submarkets within a city and at the same time want to exercise a higher degree of control over their portfolios. As a result, we expect an increasing trend of consolidation and relocation in the coming quarters," said DTZ in the report.

A safe and secure environment for employees and assets has emerged as a significant location attribute, over and above the standard needs of good connectivity, a transportation network and the existing occupier profile of the location.

"Occupiers have become more discerning of building attributes and evaluate each space option for its impact on the overall cost of occupation. Options with lower net rents are preferred with emphasis given to building efficiency, maintenance costs and parking charges," it added.

The occupier assessment of the qualitative building attributes has expanded to include a preference for single ownership structures and flexibility of layouts apart from the traditional requirements of a good developer and tenant profile.