Office space leasing jumps 3-fold to over 6 mn sft in May

New Delhi: The total office leasing activities across seven cities rose nearly three-fold during the last month to 6.1 million square feet as demand improved with the opening of workplaces, according to property consultant JLL India.

The aggregate office market leasing activities, which refers to lease transactions for all grades of office buildings, stood at 2.2 million square feet in May 2021, when the second wave of the Covid pandemic had badly hit the demand. The total or gross leasing of office spaces rose 28 per cent from 4.8 million square feet in April 2022 across seven major cities - Delhi-NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata.

The aggregate leasing data includes confirmed pre-commitments and term renewals. Bengaluru, Delhi-NCR and Mumbai had a cumulative share of 91 per cent in monthly leasing activity for May 2022. According to the JLL data, India's office Grade A (premium) stock stood at 732 million square feet at the end of the March quarter.

The office stocks of other grades were 370 million square feet, taking the total stock to around 1.1 billion square feet. When asked about the sharp rise in leasing activities during May 2022, Samantak Das, Chief Economist and Head of Research & REIS, India, JLL, said the improvement in total market demand traction indicates the resilience of office markets as well as the fact that physical workplaces continue to remain central to firms' real estate plans.

"A period of the relative ease with low Covid infections, high vaccination rate, full opening of economic activities and no restrictions on movement allowed occupiers to approach real estate planning with more certainty," he added.

However, Das cautioned that office space demand might get impacted in the coming months. "We will continue to monitor for headwinds like global inflationary and recessionary pressures that may impact office demand, though India will likely benefit from greater offshoring/outsourcing and digital spends, given its might as a major IT destination," he said.

Das noted that India's real estate costs and abundant talent pool would remain key drivers to growth in its office markets. When contacted, Gurugram-based realty firm AIPL Group Executive Director Pankaj Pal said, "We are witnessing a strong uptake in demand for both office space as well as retail since the last few quarters. In fact, demand is much higher for Grade A commercial space".

IT companies, outsourcing and BFSI sectors are the major occupiers when it comes to office space, whereas a significant chunk of demand in the retail segment is coming from branded apparel, footwear, gadgets and restaurant chains, he added.