Net absorption for office space in Jan-Sep 2022 at 30.3 million sq ft across 7 cities: JLL
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Net absorption for office space in Jan-Sep 2022 at 30.3 million sq ft across 7 cities: JLL appeared on www.moneycontrol.com by .
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The net absorption for India’s office space for the January-September period stood at a three-year high of 30.3 million sq ft, on the back of strong supply completions with healthy pre-commitments, a report has said.
On a Quarter-on-quarter (Q-o-Q) basis as well, the net absorption for the July-September quarter was up by 11 percent Q-o-Q and recorded at 9.86 million square ft, according to JLL’s Office Market Update-Q3, 2022.
Bengaluru leads in terms of nine-month net absorption levels, followed by Hyderabad and Mumbai. All the top seven cities have seen the nine-month net absorption for 2022 at much higher levels compared to the corresponding period of 2021. On a Pan-India basis, net absorption is also up by 107 percent Year-on-Year (Y-o-Y) for the nine-month period.
Among the four metros, Hyderabad led the way with a 31 percent share of net absorption, with Mumbai pushing Bengaluru to the third spot, followed by Delhi NCR. These four cities combined for an 83 percent share of net absorption in the quarter.
The gross leasing for the period between January-September 2022s is up 1.9 times Y-o-Y. The nine-month gross leasing activity is higher by 88 percent over the same period of 2021 and 13 percent over the same period of 2020, marking the first full nine months. Mumbai and Delhi NCR led the gross leasing numbers for Q3 2022 accounting for 26 percent and 23 percent, respectively.
Delhi NCR and Bengaluru are the two biggest office markets in terms of January-September 2022 gross leasing activity, followed by Mumbai. These three markets account for over two-thirds share of occupier activity in the first nine months of the 2022 calendar year, the report said.
“Tech continues to remain the dominant occupier segment accounting for 27 percent of market share although down from 33 percent Q-o-Q. Although the total space leased by Flex operators is down 45 percent Q-o-Q, this segment has a market share of 14 percent. Aided by a strong return to office, the BFSI segment has seen the share of gross leasing go up to 16 percent this quarter compared to 10 percent in the last quarter,” said Rahul Arora, Head, Office Leasing Advisory, India, JLL.
Enterprises leased around 30,000 seats in flex, down by around 22 percent from the previous quarter.
Demand for flex spaces continues to remain very strong and the corresponding growth by flex operators is likely to continue driven by increasing demand for managed space solutions from occupiers.
The nine-month flex seat take-up is already at an all-time peak of around 95,000 seats, with the year likely to end with more than 1,20,000 seats. The annual flex seat take-up in 2022 alone is likely to equal or surpass the combined total of the pre-COVID years of 2018 and 2019 as well as the past two years 2020 and 2021, the report said.
“Over the next 12 months, around 50-55 million sq ft is lined up with average pre-commitment levels of 11-12 percent. For assets owned by institutional landlords, pre-commitment rates stand at 24 percent with their share being 30 percent of the upcoming supply. Space requirements currently active are around 36-38 million sq ft, the same over the past year, indicating the robustness of the demand pipeline. We may, however, likely see some delayed decision-making as businesses look at macroeconomic signals before committing capital for new offices,” said Samantak Das, chief economist, and head of research and REIS, India, JLL.
New completions were recorded at 11.97 million sq. ft in Q3 2022, up by 8 percent Q-o-Q. For Jan-September 2022, new completions stand at 43.4 million sq. ft, higher than the corresponding periods for the last three years.
Completions in Q3 2022 were headlined by Hyderabad and Delhi NCR which combined for a 60 percent share of the quarterly supply additions. Almost 46 percent of the new supply infusion was pre-committed in Q3 2022. A significant part of this came from new completions in Hyderabad, where 57 percent of the quarterly supply was pre-committed.
Bengaluru saw an 89 percent pre-commitment rate in its new completions. Chennai and Delhi NCR also saw pre-commitment rates of 55 percent and 34 percent, respectively in their new completions.
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