Office space: Kolkata maintains consistent leasing activity in Q3

Kolkata: In terms of office space leasing, Kolkata has been able to maintain consistent leasing activity in third quarter (Q3) of 2024 as it witnessed gross leasing volume of 0.41 million sqft (msf) with Salt Lake and Rajarhat dominating key lease transactions.

The gross leasing volume as of Year To Date (YTD) 2024 stood at 1.41 msf, a 13 per cent growth on an annual basis, according to a report by the global real estate services firm, Cushman & Wakefield. The net absorption stood at 0.37 msf in Q3, which is a 9 per cent growth on a Year-Over-Year (YoY) basis; on a YTD basis, net absorption was 1.25 msf, a 15 per cent growth over the same period last year.

Professional services sector accounted for nearly 37 per cent of gross leasing volume. This was followed by the engineering and manufacturing sector with 19 per cent share and the IT-BPM segment contributing around 14 per cent of Q3 gross leasing volumes. Flex space operators continued to remain an important contributor with a share of around 11 per cent in gross leasing volume. Lease transactions at Salt Lake Sector V contributed around 53 per cent of the quarterly gross leasing volume followed by a 23 per cent contribution by Rajarhat submarket. Salt Lake Sector V and Rajarhat, the prime office corridors, recorded rental appreciation of 2-3 per cent on a quarterly basis and this trend could continue in the near future as demand remains healthy for quality office spaces in these locations. Headline city-wide rentals remained largely stable on a q-o-q basis.

As part of the key lease transactions in Q3, BIPL Omega in Sector V leased 118000 sqft to Ernst & Young. DLF IT Park at Rajarhat leased 36000 sqft to Ericsson while Mani Cassadona at Rajarhat leased 23000 sqft Workshaala, among other key transactions.

However, Kolkata recorded no new supply in Q3 as few projects at the Park Circus Connector and Salt Lake Sector V submarkets were deferred to the last quarter. The current year is likely to end with a supply of around 0.8 msf but the supply pipeline up to 2026 is 3.9 msf, with several Grade A projects currently under development. Consequently, headline office vacancy rate declined by 140 bps on a quarterly basis.