Net leasing of office space could decline by up to 14 percent this year to over 40 million sq ft across seven major cities on estimated fall in supply, according to global property consultant JLL. During 2019, the net office space leasing rose by 40 percent to an all-time high of 46.5 million square feet as against 33.2 million sq ft in 2018. New supply rose 45 percent to 51.6 million sq ft last year, from 35.7 million sq ft during 2018.
For 2020, JLL India pegged net office space leasing at over 40 million sq ft and new supply at 47.5 million sq ft.
JLL tracks office leasing of seven major cities -- Delhi-NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata.
"Despite an expected decline of office space supply in 2020, net absorption is likely to clock a robust over 40 million sq feet mark backed by significant pre-booking or pre-leasing of space by occupiers," JLL India said.
The net absorption for the year 2020 will be much higher than the annual average for the last five years which stood at 35 million sq ft, it added.
The consultant said that pre-leasing or pre-commitment of office space by corporates and co-working operators remains strong despite the economic slowdown.
"The strong pre-commitment activity is an indication of the intrinsic strength of the Indian office market. Moreover, it bears testimony to the increasing importance of real estate in the business plan of corporate occupiers," JLL India CEO & Country Head Ramesh Nair said.
He emphasised that corporates need to plan for future space requirement, particularly in cities having shortage of quality office space.
"Hence, single digit vacancy markets drive pre-commitment levels with large companies finding it viable to commit to office spaces in the under construction phase," Nair said.
JLL India said that IT-ITeS occupiers account for a majority of the pre-commitment leases across most of the top office markets in India.
They constitute more than 50 percent of the pre-committed office space in 2020.
"These occupiers require larger floor plates and this type of arrangement becomes a necessity in markets with limited availability of Grade A office spaces,” said Samanthak Das, Chief Economist and Research Head at JLL India.
US-based JLL is a leading professional services firm that specializes in real estate and investment management.
A Fortune 500 company with annual revenue of USD 16.3 billion, JLL operates in over 80 countries and a global workforce of more than 93,000 as of September 2019.
In India, JLL has presence across 10 major cities with a strength of close to 12,000 professionals.