The office space market in Calcutta experienced exceptional growth in the first quarter of 2023, outperforming other major office markets in India. According to a Knight Frank report, the average office space rent in Calcutta grew by 9 percent quarter on quarter (Q-o-Q), a significant increase compared to the top eight office markets in India. Although the volume of transactions in Calcutta was the lowest among the cities covered by the report, it doubled on a year-on-year (Y-o-Y) basis, with 200,000 square feet being transacted in the last quarter compared to 100,000 square feet transacted in January-March.
Despite the increase in demand, there was no fresh supply of office space in Calcutta in the last three months. This imbalance in demand and supply pushed up the rent, which had remained stable in the city while other markets experienced significant growth over the past three quarters. The rental level in Calcutta spiked by 9 percent YoY during the quarter.
The primary office markets in Calcutta, located in Sector V of Salt Lake and Rajarhat, are fast filling up, and occupancy is running at a decade high. At least one large project has been announced by Merlin Group in Sector V, where about 0.8 million square feet of office space will hit the market in the next 12 months. Moreover, Srijan Group has unveiled a project outside the Salt Lake-Rajarhat zone, and a new office space complex near Park Circus has been launched.
Abhijit Das, senior director (east) of Knight Frank, stated that the Calcutta office space market is showing good traction post-pandemic, and leasing activities have picked up pace. Many new companies have set up establishments in the city for the first time. Rent is currently ruling at about Rs 45 per square feet in Sector V.
According to Knight Frank India, a total of 11.3 million square feet of office space was transacted in January-March, with Bangalore remaining the top market with a total leasing of 3.5 million square feet, followed by NCR-Delhi and Mumbai. The three largest markets accounted for 73 percent of the area transacted and saw positive growth in YoY terms. One of the emerging aspects is managed flex office space operators, with flex spaces gaining ground and reaching a historic high demand share of 29 percent in Q1 2023. The premise for value-add offerings and flexibility has firmly entered the mainstream and swayed occupiers in their favour, said Shishir Baijal, chairman and MD of Knight Frank India.
