The next few quarters would be critical in terms of a pick-up in demand while maintaining the market buoyancy
Net leasing of office space rose 32 per cent year-on-year to 4.39 million sq ft during the April-June period across seven major cities, but dropped 16 per cent compared to the previous quarter because of the second wave of Covid-19 pandemic, according to JLL India.
The net absorption of office space fell 19 per cent to 9.63 million sq ft in the first six months of this year, the property consultant said.
The seven cities tracked by JLL India are Delhi-NCR, Mumbai, Bengaluru, Pune, Kolkata, Hyderabad, and Chennai.
"India’s net office absorption stood at 4.39 million sq ft in the second quarter, representing 32 per cent year-on-year growth in major cities. Given the strict nationwide lockdowns across the country in the second quarter, net absorption dipped by 16 per cent versus the previous quarter," JLL said.
Rahul Arora, Head of Office Leasing Advisory at JLL India, said that pre-leasing commitments have been largely intact and there have been limited downsizing activities by larger corporations.
"Corporate occupiers are holding on to office spaces with the belief that as vaccination drives accelerate, occupancy at offices will start to improve," he added.
Furthermore, Arora said, new office space completions during H1 2021 were recorded at 25.11 million sq ft, an increase of 75 per cent year-on-year, showing that developers are confident of a strong revival in office leasing activity once business as usual is reinstated.
"In the second half of the year, if the country can ensure that most of the active workforce gets fully vaccinated, the shift back to office premises will be more feasible and sustainable," Arora said.
As per the data, the net office leasing in Bengaluru increased sharply to 2.34 million sq ft during April-June this year from 0.45 million sq ft in the year-ago period.
In Chennai, there was a marginal increase in absorption of office space to 0.11 million sq ft from 0.10 million sq ft.
Delhi-NCR saw net leasing of 0.61 million sq ft in April-June as against 0.50 million sq ft in the corresponding period of last year.
Net leasing of office space in Hyderabad was negligible during April-June, a sharp fall from 1.18 million sq ft in the year-ago period.
Kolkata witnessed net absorption of 0.02 million sq ft of office space in April-June 2021 as against negligible in the same period last year.
In two major markets of Maharashtra, the net leasing of office space in Mumbai rose to 0.61 million sq ft from 0.45 million sq ft.
Pune saw net absorption of 0.71 million sq ft in April-June 2021 from 0.64 million sq ft in the year-ago period.
"Office rentals remained stable across the major office markets in India in the second quarter of 2021. However, landlords continue to be accommodative to the demands of occupiers and support deal closures," JLL India said.
With vacancy levels of office space already hovering at around 16 per cent, the consultant said that the next few quarters would be critical in terms of a pick-up in demand while maintaining the market buoyancy as planned supply enters the market.