Office gross leasing falls 22% in H1 of 2021: Report

New Delhi: Total gross leasing activity of office spaces fell 22 percent in first half of 2021 as compared to the same time period of 2020 in the top six Indian cities. The gross leasing stood at 10.1 million square feet, according to a report by Colliers India.

Corona’s 2nd wave and fairly high probability of a third one, compounded by the problem of slower-than-expected vaccinations in the country is causing occupiers to adopt a wait-and-watch-attitude over the remainder of 2021 before leasing new office spaces. 

“Though South India markets may have witnessed a drop in YOY leasing, we are confident in the markets’ resilience to bounce back in H2 of 2021 as markets begin opening. South India remains a favourable market for technology occupiers who continue to commit to space in the market”, Arpit Mehrotra, MD- Office Services, South India.

Bengaluru led the leasing with a share of 43 percent in the country, followed by Delhi-NCR and Mumbai garnering a share of 19 and 16 percent respectively. In Bengaluru, the large corporate occupiers continued to lease office space for their technology centers. Pune saw the sharpest decline of 74 percent due to prolonged lockdown.

“The government's initiative to inoculate the general populace has positively impacted the real estate market. Mumbai commercial real estate markets witness many inquiries, which will hopefully result in a quicker recovery”, said Sangram Tanwar, MD-Office Services, Mumbai.

Animesh Tripathi, Managing Director, Office Services for Pune, added, “while we witnessed a slowdown due to the second wave of Covid-19, we have seen a steady increase of traction in the commercial real estate market as business activities resume in a phased manner. The pandemic has caused a shift in occupiers’ priorities as observed in workspace strategies, focused on wellness and safety of employees along with a flexible portfolio over the traditional mode of operations. The sector hopes for a promising Q4-2021 as the occupiers are planning to resume office operations from 2022.”

On the supply of the office space, the first half of 2021 saw supply of about 12.1 million square feet, a fall of around 53 percent from H1 2020. Although the supply of office spaces halved this year, it was still more than demand witnessed during the period. This contributed further in increasing the vacancy levels, in addition to space rationalisation by occupiers, across the major cities. The overall vacant stock jumped by 42 percent in the top six cities.