Etail shadows IT in office occupancy in India

According to JLL, a real estate consultant, the share of IT/ITES sector in leasing volumes has declined from 48 per cent in 2005 to 32 per cent at the end of June 2015.

While e-commerce deals were almost negligible (less than 2 per cent) until a year ago, its share in the total office leasing activity went up to 6 per cent during the second half of 2014.

During the first six months of this calendar year, e-commerce share has remained almost similar at close to 5.75 per cent of the total office lease deals in India.

“The lower absorption of office space by the IT/ITES sector would be compensated to a large extent by new-age sectors such as e-commerce. The blistering pace of growth of the e-commerce sector in the country has resulted in massive office space absorption — a trend we expect to continue over the next decade as broadband connectivity further penetrates to rural households,” said Anuj Puri, chairman and country head, JLL India. According to him, the share of IT/ITES sector has continued to decline as the Indian technology sector itself is transitioning from its traditional labour arbitrage model towards newer technology platforms such as cloud computing and automation, a trend that cuts down on the requirement for human resources and consequently office space.

Another sector that has undergone substantial erosion in office space absorption is the manufacturing sector, whose share in leasing volumes has declined from 22.5 per cent in 2005 to 10.8 per cent in 2015. The export driven sectors of healthcare and biotechnology experienced record sales and profit growth as their share in office leasing activity went up to 37 per cent from 14 per cent in 10 years.