Net leasing of office space jumped over 2-fold in January-September across top seven cities to 30.26 million square feet, but is unlikely to breach the pre-COVID level this year, according to JLL India.
Net leasing stood at only 14.63 million square feet in the corresponding period of the last year across seven major cities, as the demand was adversely impacted because of the COVID-19 pandemic and lockdowns.
With the opening up of the offices and the overall economy, the demand for workspace has bounced back.
Nevertheless, the net office leasing is unlikely to cross the record absorption achieved in 2019 — the pre-COVID year — at 47.9 million square feet.
Net absorption is calculated as the new floor space occupied less the floor space vacated. Floor space that is pre-committed is not considered to be absorbed until it is physically occupied.
As per the JLL India data, the net leasing of office space in Bengaluru rose 45 per cent in January-September to 7.84 million square feet from 5.41 million square feet in the year-ago period.
In Chennai, the net office demand grew 92 per cent to 2.28 million square feet from 1.18 million square feet.
The Delhi-NCR market saw 38 per cent increase in net leasing to 4.27 million square feet, from 3.11 million square feet.
Net leasing jumped more than six times in Hyderabad to 7.22 million square feet from 1.15 million square feet. In Kolkata, the absorption of office space rose to 0.48 million square feet, from 0.10 million square feet.
Net leasing in Mumbai jumped over two-fold to 4.6 million square feet from 1.83 million square feet.
In Pune, the net leasing of office space increased 93 per cent to 3.57 million square feet in January-September this year, as against 1.85 million square feet in the corresponding period of the previous year.
“With the return to work in full flow and office occupancies rising, rising net absorption is indicative of the office remaining central to occupier workplace strategies,” JLL India said.
During the 2019 calendar year, the office market was at peak with record net leasing of 47.9 million square feet.
However, the outbreak of the pandemic in early 2020, put a brake on the growth of office demand and the net absorption plunged to 25.6 million square feet. The demand revived marginally in 2021 as leasing touched 26.2 million square feet.
Corporates and coworking operators are more active this year and the leasing has already crossed last year’s number. Still, the demand is expected to remain lower than the 2019 level.
On demand outlook, JLL India said: “We will keep a close eye on developing global headwinds which may stifle demand and in the short-term lengthen decision-making from occupiers as they look for direction from their corporate HQs and evolving macroeconomic situation in their home countries.”
For domestic outsourcing firms, the consultant said that negotiation in new contracts could impact the bottom line and thus keep expansion activity limited.
Further, JLL India said that gross leasing of office space rose 88 per cent to 35.5 million square feet in January-September from 18.9 million square feet in the year-ago period.
Gross leasing refers to all lease transactions recorded during the period, including confirmed pre-commitments, but does not include term renewals. Deals in the discussion stage are not included.