According to research by Cushman & Wakefield, gross leasing in the top eight cities reached 9.9 million square feet in Q2 2021, up 55% from 6.39 million square feet in Q2 2020. Pre-commitments and term renewals drove market activity, but new leasing remained relatively quiet.
The most active office leasing markets in the quarter were Hyderabad, Delhi-NCR, and Mumbai. According to the report, Hyderabad saw a 2X increase in gross leasing, quarter-on-quarter (QoQ) and year-on-year (YoY), with the greatest pre-commitments and the significant deal closing since Q3 2020.
According to the study, gross leasing in Delhi NCR was 13.5% lower quarterly but more than double that of the same period the previous year.
With increasing Covid-19 instances since the end of the first quarter and consequent lockdown impacting leasing activity, Mumbai's gross leasing volume was 1.45 million square feet in Q2 2021, a 51% decrease in Q-o-Q.
The countrywide lockdown in Q2 2020 was more of a knee-jerk reaction, with little awareness of the epidemic and widespread apprehensions. According to Cushman & Wakefield's Q2 Office Report, by Q2 2021, occupiers/companies were more prepared and had considerably more knowledge about the pandemic.
Flexible workplaces are also growing at a rapid pace, according to the research. Cushman & Wakefield reported a 57.8% increase in the number of flex seats (leased by enterprise clients) in Q1 2021 compared to Q4 2020 in the previous quarter. In the first half of 2020, 31,538 flex seats were rented, accounting for approximately 87% of all seats leased for the whole year (36,255).
Based on the existing situation, it is expected that the number of seats will reach 50,000 this year. According to the research, the significant increase is attributable to businesses' desire for the benefits of flexibility and cost-efficiency that flex spaces provide.
In Q2 2021, net absorption in India was 4.26 million square feet, up 28% y-o-y, owing to projects with pre-commitments being operational during the quarter. Bengaluru, Mumbai, and Hyderabad, which accounted for 34.8%, 24.1%, and 23.4% of quarterly net absorption, showed this trend.
"The COVID-19 second wave was terrible in so many ways, but the sector's perseverance in the face of adversity is nothing short of remarkable. From here, I am sure that the second part of the year will have a solid upward trajectory, with the COVID-19 inoculation programme receiving the required push from government and corporates,” stated Anshul Jain, Managing Director – SE Asia and India.
Source: Money Control