Scope to upgrade 100m sq ft of office space across India's top six cities: Colliers

LANDLORDS and developers have scope to upgrade around 100 million square feet (sq ft) of office space - or 14 per cent of existing stock - across India's top six cities, according to a report by Colliers.

The property consultancy noted that central business districts (CBDs) have the highest proportion of outdated stock, accounting for 60 per cent of the total CBD stock across these six cities.

The cost of retrofitting this outdated stock could cost up to US$1.2 billion, or 9,000 crore rupees, according to their report, "Revitalising Outdated Buildings - A requisite to avoid redundancy".

"This is an opportune time for landlords to upgrade their properties. Many occupiers are considering moving from old-generation to new-generation buildings and, more than ever before, looking at aspects like HVAC upgrades, improved indoor air quality standards and smart features," said Ramesh Nair, CEO, India and managing director, market development, at Colliers India.

"The focus is also on modern amenities which improve operational efficiency and enable collaboration. Occupiers are also looking at a reduced capex from their side. In this context, retrofitting buildings will revive demand by generating a renewed sense of interest among occupiers," he said.

Colliers estimates that landlords could potentially reap up to 20 per cent rental appreciation and 10-15 per cent in terms of energy savings.

"Bengaluru, Delhi-NCR and Mumbai together account for about 75 per cent of the total stock ready for upgradation. Mumbai has the highest potential, with 28 million sq ft of obsolete inventory. In the NCR, Delhi leads for upgradation in the CBD (followed by) Nehru Place and Okhla micro-markets where up to 49 per cent of the stock is outdated," said Colliers.

"With upgraded buildings, we believe occupiers will naturally be inclined toward these buildings due to the prominence of location, robust public transport, and lack of land and new supply, which will reduce vacancies."

Colliers also estimated that an additional 193 million sq ft of space could be ready for upgrade in the next five years, of which 27 per cent is located in Mumbai, 25 per cent in Bengaluru and 23 per cent in Delhi NCR.