Net leasing of office space fell 50 per cent across seven major cities to 5.4 million sq ft in the July-September quarter as corporates and coworking players continued to defer their expansion plans due to the COVID-19 pandemic, according to property consultant JLL India.
The net absorption of office space stood at 10.9 million sq ft in the year-ago period across seven cities -- Delhi-NCR, Mumbai, Kolkata, Chennai, Pune, Hyderabad and Bengaluru.
During the January-September period of 2020, the net office space leasing dropped by 47 per cent to 17.3 million sq ft from 32.7 million sq ft in the corresponding period of the previous year.
"India's office market witnessed a net absorption of 5.4 million sq ft in quarter ending September 2020 (Q3), an increase of 64 per cent versus quarter ending June 2020 (Q2)," JLL India said in a statement.
During July-September 2020, Bengaluru was at top with net leasing of 2.72 million sq ft, followed by Hyderabad at 1.54 million sq ft. Leasing of office space in Pune stood at 0.46 million sq ft, Mumbai 0.28 million sq ft, Chennai 0.21 million sq ft, Delhi-NCR 0.2 million sq ft and Kolkata 0.02 million sq ft during the July-September 2020. JLL India did not provide the year-ago period data in the statement. Except for Bengaluru which witnessed a marginal increase in rents, office rents in Q3 2020 vs Q2 2020 remained stable across all markets under review, it added.
"Increased office space consolidation and optimisation strategies of corporate occupiers resulted in subdued net absorption levels, which could not keep pace with new completions. This resulted in overall vacancy increasing from 13.1 per cent in Q2 2020 to 13.5 per cent in Q3 2020," the statement said.
In 2019 calendar year, the net office space leasing stood at record 47 million sq ft on robust demand from large corporates and coworking players.
However, the COVID-19 pandemic has impacted the office demand as corporates are cautious and deferring decisions on their expansion plans. The Work from Home (WFH) concept is also contributing to this fall in demand for office space.
