Nucleus Office Parks, the operating platform for fully-owned office properties of India’s largest commercial real estate owner Blackstone Group, has revised its leasing guidance upward for the year led by robust uptick witnessed in demand owing to strong revival in business environment post the Covid19 pandemic.
“The large-scale hiring across key sectors and return to office is already driving the demand for office space. Most of the occupiers are in the market looking for offices for their expansion now and not for rewiring or reoptimizing their portfolio as was the case a year ago,” Quaiser Parvez, CEO, Nucleus Office Parks, told ET in an exclusive interaction.
In the last two quarters, the company has leased over 5.3 million sq ft space including renewals across its office parks in key property markets of the country. Based on the demand and enquiry levels, Nucleus Office Parks expects to convert demand of at least 3 million sq ft this year.
“Over 60% occupiers are looking for space for expansion now as against roughly about 18 to 20% in May 2021. Average size of the transaction has increased from 26,000 sq ft to about 40,000 sq ft. Average size of suppliers’ building size is also changing from about 320,000 to about 400,000 sq ft. All of these factors are clearly indicating that commercial realty will shape up strongly from here,” Parvez said.
Nucleus Office Parks current portfolio includes over 17 million sq ft of grade A commercial office spaces spread across 13 marquee assets in Mumbai, Bangalore, the National Capital Region (NCR), Chennai and Ahmedabad. It will be adding 1.5 million sq ft office spaces to this portfolio including 9 lakh sq ft in Mumbai’s Lower Parel and 6 lakh sq ft in Gurgaon by June.
Parvez believes the Indian office market is expected to witness a rebound driven by record hiring, expansion in the information technology, IT-enabled services sector and other sectors including flexible workspace providers and life-sciences.
Office space absorption across top 8 cities of the country stood at 38.1 million sq ft in 2021, of which nearly 26 million sq ft was transacted during the second half of the year, marking a recovery in demand for office properties, showed data from Knight Frank India.
According to the data, demand for office made a swift return despite around a month being disrupted by the third wave of Covid19 that impacted decisions in the early part of the first quarter of 2022. With 10.8 million sq ft of leasing during the quarter, office space recorded a 25% on-year growth.
Based on the hiring in the past 18-24 months, the top five IT companies’ incremental demand for office spaces is expected to be nearly 11.67 million sq ft over the next two years once the offices open with full capacity. India’s top five IT companies are reported to have hired approximately 260,000 new employees during the April 2020 to September 2021 period.
According to Parvez, the steady space take-up by the IT sector is continuing as both global and domestic companies have picked up large office spaces in the past few months signalling a robust comeback of leasing momentum.