Office space leasing declines 36% in January-March amid COVID-19 pandemic: Report

New Delhi: Net leasing of office space dipped 36% to 5.5 million sq. ft across seven major cities during January-March this year on lower demand because of the COVID-19 pandemic, according to property consultant JLL India. Office rents, however, remained stable.

Net absorption of office space fell to 5.53 million sq. ft in January-March 2021 from 8.6 million sq ft in the year-ago period across seven major cities, mainly due to a plunge in demand in Mumbai that is facing a severe second wave of the pandemic.

As per the JLL India data, in Bengaluru, prominent office market, the net leasing dropped to 2.2 million sq. ft in January March 2021, from 2.7 million sq. ft in the same period last year.

Mumbai, another key market, witnessed a sharp fall in leasing of office space to 0.2 million sq ft from 2.1 million sq. ft.

Chennai saw a decline in office leasing to 0.4 million sq. ft from 0.9 million sq. ft, while Delhi-NCR witnessed a fall to 1.1 million sq. ft from 1.5 million sq. ft.

However, net leasing of office space grew to 1.1 million sq. ft in Hyderabad from 0.9 million sq ft in the year-ago period. Kolkata also witnessed growth to 0.04 million sq. ft from 0.02 million sq. ft. Pune also saw a marginal rise in leasing to 0.5 million sq ft from 0.4 million sq ft.

On the supply side, JLL India reported that new completions during the first quarter of 2021 were recorded at 13.43 million sq. ft, which is 56% up from 8.6 million sq. ft in the first quarter of 2020.

JLL India Chief Economist and Head (Research and REIS) Samantak Das said, “As the vaccination drive is gaining momentum and occupiers remain cautiously optimistic, the year 2021 is expected to witness close to 38 million sq. ft of new completions, while net absorption is likely to hover around the 30 million sq ft with a marginal downward bias.” In full year 2020, net absorption stood at around 26 million sq ft.