Demand for office spaces rising in cities

New Delhi: Net office leasing rose by 8 per cent to 5.85 million square feet in the July-September period of this calendar year across seven cities on better demand from corporates and co-working operators, according to JLL India. Property consultant JLL India attributed the rise in net absorption to various factors such as better awareness about coronavirus, preparedness along with mass vaccination drive and unlocking of the economy has aided in the revival of the office market.

Net absorption or leasing includes fresh leasing in completed buildings and pre-commitments in buildings that become operational during the time being reviewed, and excludes exits/terminations, churns, renewals, and pre-commitments in future supply. “The office market has been progressive in Q3 2021 and this momentum is expected to continue in the coming quarters as the demand for office spaces will continue to expand backed by consolidation and expansion of office spaces by occupiers and increasing demand for satellite offices,” said Radha Dhir, JLL India CEO and country head.

Although the leasing activity gained momentum in Q3 of 2021 calendar year, the consultant said it is yet to reach the pre-pandemic levels measured in terms of quarterly average seen in 2019 and Q1 2020. Vacancy levels of office space increased to 16.4 per cent in the July-September 2021 from 13.5 per cent in the year-ago period. New supply of office space increased by 19 per cent to 10.89 million sq ft.

According to the report, office space leasing in Bengaluru dropped to 1.01 million sq ft in July-September from 2.7 million sq ft in the year-ago period. Hyderabad saw a dip in demand to 1.09 million sq ft from 1.54 million sq ft.

Chennai saw an increase in net absorption to 0.70 million sq ft from 0.21 million sq ft. Office space leasing in Delhi-NCR increased to 1.41 million sq ft from 0.20 million sq ft. Kolkata witnessed a marginal increase to 0.03 million sq ft from 0.02 million sq ft. The net absorption in Mumbai increased to 0.97 million sq ft from 0.28 million sq ft, while Pune saw an increase to 0.64 million sq ft from 0.46 million sq ft.

“Taking cues from 2020, the last quarter of the year is expected to witness increased momentum in the office space. However, net office absorption across seven major cities in 2021 is unlikely to touch net absorption recorded in the previous year (25.6 million sq ft) with about 15 million sq ft being recorded in the first three quarters of 2021,” said Samantak Das, chief economist and head research and REIS, India, JLL. IT/ITeS occupiers continue to drive leasing and form a majority proportion of demand, he said.

“With the unlocking of the economy, several IT firms are keen to bring back their employees to the workplace,” Das said.