Office leasing up 97% in Jan-Sep in 6 cities; may hit record in 2022: Colliers

New Delhi: Gross leasing of office space nearly doubled to 40.6 million square feet during January-September across six major cities on pent up demand driven largely by technology and co-working firms, according to Colliers.

The absorption of office space stood at 20.6 million square feet in the year-ago period across six cities -- Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune.

Real estate consultant Colliers India expects absorption of office space to hit an all-time high in the 2022 calendar year, with leasing set to cross 50 million square feet.

The previous high was seen in 2019 at 44.8 million square feet.

Gross absorption does not include lease renewals, pre-commitments and deals where only a letter of intent has been signed.

"We are at an exciting stage in the market wherein demand and supply are ramping up. Tech companies and flex operators together accounted for about 50 per cent of the total demand during the first three quarters this year," Colliers India CEO Ramesh Nair said.

Colliers India attributed the spurt in leasing to spillover in demand from the last two years.

"Occupiers that were postponing their leasing decisions during 2020 and H1 2021 are now being even more optimistic about leasing space," the consultant said.

Nair highlighted that vacancy levels have reduced to 16.7 per cent at the end of September quarter from 18.5 per cent in January-March period this year.

"However, the concerns around recessionary pressures in the global markets continue... And it needs to be seen how they will impact occupiers' decisions and confidence towards the end of the year," Nair said.

He foresees a slight dent in enquiries/demand in the near term.

Leading tech and flexible space occupiers leased 19.8 million square feet of space during the first nine months of this year, accounting for nearly half of the total leasing across the top six cities.

As per the leasing transactions data, all six cities have reported higher absorption of office space during January-September 2022 compared to the corresponding period of the previous year.

The office space leasing in Bengaluru jumped more than two-fold to 12.8 million square feet from 6.3 million square feet.

Chennai saw 79 per cent rise in leasing to 3.6 million square feet from 2 million square feet.

In Delhi-NCR, the office space absorption jumped 160 per cent to 8.8 million square feet from 3.4 million square feet.

The absorption of office space in Hyderabad rose 51 per cent to 5.6 million square feet from 3.7 million square feet.

In Mumbai, the leasing doubled to 5.6 million square feet from 2.8 million square feet.

Pune saw 73 per cent growth in the gross leasing of office space to 4.2 million square feet in January-September from 2.4 million square feet in the same period of 2021.

Colliers data showed that new supply of office space went up 49 per cent to 32.8 million square feet in the first nine months of 2022, from 22 million square feet in the year-ago period.