New Delhi- Net leasing of office space fell 31 per cent in the December quarter to nearly 8 million square feet across seven cities as corporates delayed their expansion plans amid global headwinds, according to property consultant JLL India.
The absorption of office space, however, rose 46 per cent in the entire year to 38.25 million square feet from 26.17 million square feet in 2021 on lower base and improved demand after the Covid cases fell sharply.
Net leasing or absorption, which is calculated as the new floor space occupied minus floor space vacated, fell to 7.99 million square feet in the fourth quarter of this calendar year from 11.55 million square feet in the year-ago period, as demand was subdued in five cities — Bengaluru, Hyderabad, Pune, Kolkata and Mumbai.
Chennai and Delhi-NCR were the only two cities which witnessed higher year-on-year demand in the December quarter.
In the October-December period, JLL India said the leasing of office space has fallen on account of “delayed decision-making and a cautious approach from occupiers”. This reflects early signs of sluggishness driven by global headwinds.
During 2022 calendar year, all seven cities have reported an increase in office space leasing compared with 2021.
According to the JLL India’s city-wise data, Bengaluru saw a 50 per cent decline in office leasing to 1.20 million square feet during October-December quarter as against 2.41 million square feet a year ago. The IT city, however, witnessed a 16 per cent growth in demand to 9.05 million square feet in 2022 from 7.82 million square feet last year.
In Chennai, the absorption of office space rose 45 per cent to 1.24 million square feet in the quarter under review over 0.85 million square feet in the corresponding period of the previous year. The office demand in Chennai was up 78 per cent to 3.51 million square feet in 2022 compared with 2.03 million square feet in the preceding year.
The net leasing of office space in Delhi-NCR went up 17 per cent to 1.89 million square feet in October-December from 1.61 million square feet in 2021. During the entire 2022, the absorption of office space rose 31 per cent to 6.16 million square feet as compared with 4.72 million square feet in the previous year.
In Hyderabad, the net leasing fell 42 per cent to 1.74 million square feet during the current quarter from 2.99 million square feet in the year-ago period. The absorption more than doubled to 8.96 million square feet in 2022 from 4.14 million square feet.
Kolkata witnessed a 57 per cent decline to 0.2 million square feet in the fourth quarter of this calendar year from 0.47 million square feet in the year-ago period. The city saw 18 per cent growth in demand to 0.68 million square feet this year from 0.57 million square feet in 2021.
In Maharashtra’s two big office market, Mumbai saw a 44 per cent decline in the office leasing to 1.05 million square feet during October-December from 1.88 million square feet last year. The financial capital witnessed 52 per cent increase in absorption of office space to 5.65 million square feet in 2022 from 3.70 million square feet.
Lastly, the net leasing of office space in Pune was down 50 per cent to 0.66 million square feet in October-December period from 1.34 million square feet. The city clocked 33 per cent growth in demand during this year to 4.24 million square feet from 3.18 million square feet during 2021.
“The office market in India has made a strong recovery in 2022 with the year emerging as the strongest in terms of office market performance post-Covid and second only to 2019 over the last decade,” Rahul Arora, Head Office Leasing Advisory India and MD, Karnataka & Kerala at JLL India, said.
Gagan Randev, Executive Director at India Sotheby’s International Realty, said the outlook for 2023 remains strong for Grade-A office buildings.
“Coworking and enterprise solution office space would continue their growth trajectory as flexi and managed spaces remain the preferred option for quite a few clients. The big commercial developers are constantly enhancing building specs and efficiency as they look to ensure that they are able to continue to demand the rentals that Grade A offices command,” Randev said. (PTI)
