Net office leasing across seven major cities is likely to remain flat or may grow slightly from 25.6 million square feet achieved in 2020, as corporates have not shelved their expansion plan amid the second wave of the COVID-19, according to a senior JLL India official.
In an interview with PTI, Rahul Arora, Head of office leasing advisory, JLL India, said the year 2021 started on a strong note with net absorption of 5.5 million sq ft of office space across seven cities -- Delhi-NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata -- during January-March quarter.
However, he said, the leasing momentum was affected in the second quarter of the current calendar year due to the second COVID-19 wave.
On the net leasing outlook for 2021, Arora said: "We expect the absorption to remain similar to 2020 or perhaps better in case we do not face another lockdown in H2 of the year".
Net absorption fell sharply to 25.6 million sq ft in 2020 from a record 46.5 million sq ft in the previous year because of the pandemic.
"In a nutshell, office leasing did show a fair amount resilience in 2020 and was back almost 55 per cent of 2019 - which was an exceptional year for the leasing market," Arora said.
He highlighted that the year 2021 started on a very strong note, with over 15 million sq ft of space requirements floated through RFPs (request for proposals sent by corporate occupiers to developers).
"Even though Q1, 2021 witnessed the robust absorption of almost 5.5 million sq ft, there was an immediate impact of lockdown 2.0. However, the ray of hope for the sector was the fact that corporates didn't shelve but just delayed these requirements.
"Closer to the re-opening 2.0 across the country, we have several clients enquiring about various opportunities, considering flex vs permanent, furnished vs unfinished," he said.
Arora said corporate occupiers are undertaking various measures to ensure the eventual come back to the office is safe, sustainable and productive.
"All are concerned about the wellbeing of their employees and hence we have seen several extremely successful vaccination drives for all employees and their families. While WFH (Work From Home) will continue for a while, perhaps until most are vaccinated, the market will witness the hybrid workplace strategies in the coming months," he observed.
From an office leasing perspective, Arora said it is evident that the companies do not intend to implement WFH owing to various challenges.
"Tech giants continue to hire. We expect a more focussed approach on hybrid return to work - some close to house centres, along with the main office with only a fraction of people allowed to visit offices.
"Flex space is expected to witness an increased demand in the near term. We expect to see a larger workforce return to office in 2022 (only post vaccinations)," he said.
The consultant said that the supply of new offices has been affected due to the non-availability of labour and lack of funds.
Arora said rentals are expected to remain stable in key micro-markets.
JLL India, part of US-based real estate consultancy firm JLL, is one of the leading property consultants in India with dominance in commercial leasing and facilities management businesses.
JLL India's revenue stood at around Rs 4,000 crore in 2018-19. The turnover of 2019-20 and 2020-21 have not been disclosed.
