Kolkata: With Infosys announcing that it will soon start operations in Kolkata, real estate market experts are of the opinion that 2023 will see a robust supply of office space in the city, especially the prime sub-markets of Salt Lake Sector-V and Rajarhat, which will exceed the pre-Covid period levels.
Infosys took to Twitter and wrote: “Kolkata here we come! Infosys now in your very own city. Looking forward to welcoming you to our office soon. Stay tuned for latest updates and job openings! #InfyKolkata# ForwardWithInfosys”. The IT giant has taken a 40,000 sqft office at Rajarhat while its campus in the city nears completion. It had taken 50 acres in New Town. The state government is setting up a Silicon Valley hub in New Town.
This announcement has not only increased the prospect of employment generation but may also boost the office market in Kolkata which witnessed lows in 2022. According to a report by real estate consultancy firm Cushman & Wakefield, Kolkata recorded no new completions in the fourth quarter of 2022, thereby witnessing no increase in the city’s Grade-A office stock during the year. The average city-wide vacancy declined to 29% in Q4-22 from over 31% in the same quarter in 2021.
However, the report revealed that a supply of 1.85 million square feet is expected to come into the market in 2023, which would exceed the pre-Covid period (2019) levels and address a growing occupier demand for quality commercial space.
It was highlighted that the new supply is expected around the prime office corridors — Salt Lake Sector V and Rajarhat. Further, prominent city-based developers have launched new projects on the back of strong medium-term demand outlook, and these would translate into an addition of around 2 million square feet of Grade-A office space over the next three years. It is expected that the total upcoming supply during 2023-25 will be 3.91 million square feet, the report claimed.
Another positive aspect highlighted in the report is “with significant new supply expected to enter the market in 2023, a significant uptick in rentals is unlikely in the near future. Landlords will be more focused on attracting or retaining tenants rather than negotiating on rent, although select properties with a limited vacancy and high demand, particularly in prime sub-markets of Salt lake Sector V and Rajarhat, could fetch a premium.” According to the report, in 2022, the IT sector accounted for 45% of annual gross leasing volume (GLV) with flexible workspaces occupying the second spot with a 17% contribution. Professional services, engineering and manufacturing occupiers contributed around 13% and 10% of annual GLV, respectively. The prime office corridors — Salt Lake Sector V and Rajarhat — remained the chief sub-markets with the highest leasing activities both on a quarterly and annual basis.