Business Office space growth at 8-quarter high in October-December

Business Office space growth at 8-quarter high in October-December



NEW DELHI: The Indian office sector ended 2021 with net absorption of 11.6 million square feet for the October-December period, the highest in the last eight quarters despite the Covid pandemic and work from home regime followed by several companies, reports Prabhakar Sinha.

The office space absorption in the fourth quarter of 2021 is up by 86% from the July-September quarter with 6.21 million sq ft and 37% from the fourth quarter of 2020 with 8.42 million sq ft, real estate consultancy firm JLL said in a report.

Bengaluru, Hyderabad and Delhi contributed 61% of the total absorption of office space in the October-December quarter.

Hyderabad surpassed Bengaluru with 3 million sq ft of net absorption, pushing the garden city to the second place. Older pre-commitments also held firm and were an indicator of occupier confidence in business and growth, said the report. Pre-commitments were a key driver, with 60% of the new supply of 9.12 million sq ft, which came on-stream in October-December 2021, already pre-leased.

“For most occupiers, their real estate plans are intact, and in fact, an active demand of 33-35 million sq ft is already matching pre-Covid levels,” said Samantak Das, chief economist and head research and REIS, India, JLL. This is a clear sign of the long-term confidence that occupiers have for India as a vital cog to their operations and towards the office’s role in their future, he said.

“In any case, we forecast a net absorption of around 31-33 million sq ft for 2022, up by 20-25% Y-o-Y,” the report said. “Leasing of office space in Q4 of 2021 is also the highest in the last eight quarters and higher than the average quarterly leasing volume during the pre-Covid period of 2018 and 2019 as well,” said Radha Dhir, CEO and country head, India, JLL.

With a greater understanding of employee expectations and a hybrid form of working best suited to them, most firms had reworked their workplace strategies, Dhir said.

She said developers were very active in keeping portfolio occupancies high by incentivising term renewals. As a result, term renewals have risen by nearly two times since 2018-19 and were recorded at over 13 million sq ft in 2021, mainly to save costs by occupiers. JLL said 481 term renewal deals were recorded during 2021 compared to 203 in 2020 and 193 deals in 2019.


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