Buoyed by the back-to-office activities that is currently the focus for the country’s corporate sector, the office leasing market is abuzz with activities. After touching the nail in mid-2020 due to COVID-induced lockdowns and other disruptions, office leasing has finally made a comeback with a bang.
According to data from real estate services and advisory firm JLL India, during the April-June quarter office leasing activities in the country’s top seven markets jumped by a whopping 182 per cent over the corresponding quarter previous year. In the period, some 14.29 million square-feet of office space were leased out, compared to 5.06 million square-feet in April-June, 2021.
Among the top markets, Bengaluru led the surge with 285 per cent year-on-year growth, followed by Chennai (199 per cent) and Delhi-NCR (170 per cent). While, in terms of volumes, Delhi-NCR market remained at the second spot with 4.31 million square-feet, behind Bangalore’s 4.86 million square-feet.
Leasing activities jumped over the previous quarter too, indicating a steady recovery since the second COVID wave in 2021. On a quarter-on-quarter basis, gross leasing activities surged 36 per cent in April-June 2022 quarter, where Bengaluru (with 203 per cent jump) and Delhi-NCR (51 per cent) led the surge.
Gross Leasing Volume 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.
According to Rahul Arora, Head of Office Leasing Advisory India & MD, Karnataka & Kerala at JLL India, demand from technology companies boosted office leasing during the quarter. While manufacturing and industrial sector aided this growth.
“The tech segment saw its share rise to 33 per cent from 25 per cent QoQ, clearly outlining its continued dominance as the most prominent occupier segment in India’s office sector. Manufacturing/industrial continues to show impressive gains with a 13 per cent share of market activity backed by India’s policy push yielding results in this segment. Flex continues to make rapid strides as a major occupier segment with its mainstreaming among occupier space strategies resulting in a share of 20 per cent in quarterly leasing activity. In fact, flex leased 2.8 million sq. ft in April-June 2022, the highest in 12 quarters and the first half of 2022 numbers are already 30 per cent higher than the annual flex space take-up for both 2020 and 2021 individually,” said Arora.
As per analyses by Colliers India, local subsidiary of the Canada-headquartered professional services and investment management company, activities from consulting and BFSI (banking and financial services institutions) jumped four-fold and formed nearly 25 per cent of the recent deals.
“The quarter saw increased office occupancy after a hiatus, as demand outpaced supply by a significant margin. Absorption in the first two quarters of the year has already surpassed more than 80 per cent of the total absorption seen in the whole of 2021. Clearly, office demand is well headed to close at 40-45 million sq.ft. by the end of this year. Resultantly, rentals are also likely to firm up in next two quarters as the occupancy levels rise.” Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.
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