The year 2022 is likely to emerge as the best year in terms of office space leasing, with absorption likely to cross 50 mn sq feet across the top 6 cities including Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune, said Colliers, commercial real estate advisory and professional services firm, this morning.
According to the property advisory and consulting firm, the spurt in leasing is driven by a spillover in demand from the last two years. Occupiers that were postponing their leasing decisions during 2020 and H1 2021 are now being even more optimistic about leasing space. Also, occupiers are not shying away from leasing new large spaces, even as hybrid working continues to be the mainstay.
As per Colliers’ assessment, office absorption has already touched 40.6 mn sq ft in the first three quarters (Jan-Sept 2022), a two-fold increase from the same period last year which witnessed lockdowns due to Covid-19. The larger markets of Bengaluru, Delhi-NCR and Mumbai accounted for around 67% of the total absorption, backed by robust demand from Tech and Flex players. Demand in Bengaluru, Delhi-NCR and Chennai has already surpassed the earlier high seen in 2019. Mumbai, Hyderabad and Pune were also inching towards reaching historical levels by the end of the year, the realty firm observed.
Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers said, ``Tech companies and flex operators together accounted for about 50% of the total demand during the first three quarters this year. Indian firms both startups and large firms are eyeing office expansions.’
The year so far also saw greater supply in the market, with new completions rising 1.5x YoY to 32.8 mn sq feet.
However, he added, the concerns around recessionary pressures in the global markets continue to look at large and it needed to be seen how they would impact occupiers’ decisions and confidence towards the end of the year. ``We could see a slight dent in enquiries/demand in the near term,’‘ he pointed out.