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The combined office net absorption across seven cities stood at 11.55 million sq. ft. at the end of the first quarter (January-March) of 2022, according to JLL’s Office Market Update-Q1, 2022. Net absorption was up by a significant 113% year-on-year, indicating the momentum that is now visible in the market.
Occupier confidence for older space deals remains intact as on-ground activity picks up, according to CBRE. Some transaction slippages also caused the gross leasing number to be lower than net absorption for the first quarter of 2015. Net absorption was higher than overall market traction, driven by pre-commitments in new completions.
The flex segment leased 2.2 million sq. ft of space in Q1 2022, the highest since the pandemic. The tech sector continued to lead but its share stood at 25%, with BFSI accounting for a 10% share. Consulting saw its leasing share jump to double digits at 13%.
The Gross leasing Volume (GLV) for Q1 2022 was recorded at 10.5 million sq ft, the second-highest in the past 8 quarters. Occupiers also leased over 24,200 seats in the flex segment which has gone mainstream given the change in occupier portfolio strategies.
The larger cities of Delhi (27%), Mumbai (18%), Pune (16%) & Bengaluru (15%) together accounted for over three-fourths of the GLV recorded in Q1 2022. Hyderabad recorded the highest net absorption among the top seven cities, followed by Pune.
For 2022, we expect Grade A supply of 50-52 mn sq ft to be completed across the top seven cities. Net absorption is expected to be around 36-38m sq ft, a 35-40% growth on a year-on-year basis.
Hyderabad, Pune and Bengaluru saw the highest ever supply addition in a quarter for the top seven cities combined with 20.21 million sq. ft. Almost 39% of the supply coming on stream in Q1 from these three cities was already pre-committed.
India’s office vacancy rate is forecast to remain within the 15-16% range over the next 12 months. While tech companies are slowly bringing workers back to the office, a hybrid model with time split between offices, homes and flex options is likely to be implemented across companies.
