·
Hyderabad
leaped to the top three cities led by some large block deals in Q3 2021.
Bengaluru accounted for the highest share at ~30%, followed by Delhi-NCR &
Hyderabad at 19% & 18% respectively
·
Flex
spaces gained a significant share at 15% followed by the engineering and
manufacturing sector at 12%. IT-BPM and technology sector remained dominant at
40% of the overall demand and buoyed the growth in leasing
·
Leasing by start-ups
up 56% in top 3 cities
Gurgaon, 13 January 2022:
Overall office gross absorption across the top six cities was at about 33
million sq feet, 10% higher compared to 2020, as per Colliers. Pan-India
absorption during the year surpassed the annual gross absorption during
2016-2018 by 7%, signalling a strong revival in occupier confidence. Occupancy
levels rose in prominent office micro markets across the top 3 cities at the
end of 2021 from Q3 2021, led by a gradual revival in demand and fewer occupier
exits.
Overall office space absorption is reviving
and growing better-than-expected. On a city level, all cities, except Bengaluru
and Delhi-NCR have surpassed the annual average absorption of 2016-2018.
Hyderabad had seen strong recovery gains in 2020 and maintained its streak in
2021 as well. It was followed by Chennai and Mumbai which gained significant
scale during the year. This is attributable to a strong fourth quarter,
building on the momentum witnessed during the previous quarter of the year.
“Hyderabad
leaped to the top three cities led by some large block deals in Q3 2021.
Bengaluru accounted for the highest share at ~30%, followed by Delhi-NCR &
Hyderabad at 19% and 18% respectively. Flex spaces expanded at a fast pace this
year led by occupiers’ hybrid and decentralised work plans. During the year
2021 flex spaces leased about 4.8 million sq feet of space, a 60% rise
YoY. Flex space leasing accounted for 15% of the leasing, compared to the 9%
share last year. Bengaluru accounted for maximum flex space leasing, followed
by Hyderabad and Pune” – Arpit Mehrotra, Managing Director, Office Services
(South India) at Colliers.
For instance, submarkets such as NCR’s MG
Road, Mumbai BKC and Bengaluru’s SBD and Whitefield saw higher occupancy QoQ
after a gap of at least 6 quarters. At the same time, total pan-India vacancy
levels stood at 18.5%, a merely 40-basis point increase from Q3 2021.
In terms of new supply, the year 2021 saw 35
million sq feet of supply, almost at similar levels of 2020 as developers exercised
‘wait-and-watch’ and aligned new supply in response to market demand.
Leasing by start-ups up 56% in top 3 cities
In the top three cities, start-ups leased
about 2.2 million sq feet of space during 2021, a 56% rise from 2020. The
biggest spurt was seen in Delhi-NCR where start-ups leased office spaces in
Gurgaon largely. This comes at a time when India saw the 42 start-ups becoming
unicorns – the highest ever.
Flex spaces expanding across peripheral and suburban locations
Flex spaces expanded at a fast pace this year
led by occupiers’ hybrid and decentralised work plans. During the year flex
spaces leased about 4.8 million sq feet of space, a 60% rise YoY. Flex space leasing accounted for 15% of the
leasing, compared to 9% share last year. Bengaluru accounted for maximum flex
space leasing, followed by Hyderabad and Pune.
Operators are leasing space for new centers in
suburban and peripheral locations as occupiers explore and adopt the
decentralised way of working with hub and spoke-style offices, aligning with
business continuity plans.
“Office leasing activity in Pune has seen a
noteworthy recovery in the second half of 2021 concluding the year with 4.71
MSF of gross absorption, which has been the city’s decadal average absorption
from 2011 to 2020. Demand drivers predominately remain as IT& IT-es and
flex spaces. For 2022, while the forecasted demand remains conservative for the
first quarter we strongly believe that the leasing activity will continue the
upward momentum through the rest of the year with the market being in tenant
favourable conditions” - Animesh Tripathi, Managing Director, Office
Services (Pune), Colliers.
Delhi-NCR leasing up 50% led by demand for next-gen offices
Delhi NCR registered a 50% increase in leasing activity in 2021 on a YoY
basis. Gurugram accounted for almost 64% share in leasing activity as many
firms relocated to better quality buildings in upcoming micro markets such as
Golf Course Extension Road and also centralized locations like Cyber City and
MG Road. Recently delivered buildings are witnessing greater traction as
occupiers consolidate their portfolios in Grade A buildings with better
wellness standards. A similar trend is seen in other cities where occupiers are
exploring next-generation offices to move into as developers and occupiers are
committed to future-proof office spaces.
“India has shown remarkable progress in the second half of 2021 in comparison to y-o-y 2020. Both Residential and Commercial segments have showcased positive indices which is a good sign for the economy despite the loss of Q2 2021 due to the second wave. For North India, only the NCR can boast in terms of significant office absorption as the other major cities have not chosen office markets. Co-working transactions have been the preference for most occupiers and will continue to be the preference for Occupiers throughout 2022. The overall absorption numbers indicate a strong growth for corporates to commit to the office segment” - Bhupindra Singh, Managing Director, Regional Tenant Representation and Office Services, North India, Colliers.
About Colliers
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