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Commercial leasing up 16% on year to cross 41 mn sq. ft.; Bengaluru, Hyderabad and Delhi-NCR key drivers: CBRE

With supply growing 18% y-o-y in 2021, India’s office stock crosses 773 million sq. ft. in 2021, the report added.

Commercial leasing activity has grown by almost 16% y-o-y from 35.4 million sq. ft. in 2020 to more than 41 million sq. ft. during 2021, with Bengaluru, Hyderabad and Delhi-NCR together accounting for 70% of the leasing activity, according to a report by real estate consultant CBRE.

Technology corporates drove leasing with a share of 30%, followed by flexible space operators (15%), engineering and manufacturing companies (14%), BFSI (13%) and life sciences firms (6%). In a first, flexible space operators overtook technology corporates in terms of quarterly leasing activity in Q4 2021. Other leading sectors included BFSI (18%), engineering and manufacturing (14%) and life sciences (5%), the report said.

The report said that office supply increased from 42.1 million sq. ft in 2020 by almost 18% y-o-y to touch almost 50 million sq. ft. in 2021, leading to the total office stock in the country to cross 773 million sq. ft. Hyderabad, Bengaluru and Delhi-NCR drove supply during the year, accounting for a cumulative share of about 70%.

Supply grew 14% q-o-q to touch nearly 15.5 million sq. ft. in Q4 2021, with most cities reporting an increase in building completions. Pune, Bengaluru and Hyderabad drove supply addition during the quarter with a total share of more than 70%, the report said.

Office space take-up was dominated by small- (less than 10,000 sq. ft.) to medium-sized (10,000 – 50,000 sq. ft.) transactions in 2021 with a share of 85%, up from 81% in 2020.  The share of large-sized deals (greater than 100,000 sq. ft.) marginally declined from 9% in 2020 to about 7% in 2021. Bengaluru and Hyderabad, followed by Delhi-NCR and Pune, dominated large-sized deal closures in 2021, while a few such deals were also reported in Chennai, Mumbai and Kolkata.


A divergence in rental movement was observed in Q4 2021 – while rents remained broadly stable across cities; an increase was recorded in ORR, PBD Whitefield, EBD and NBD in Bangalore and SBD Kharadi, SBD East and CBD in Pune. Rental value correction was limited to PBD Hinjewadi in Pune, the report said.

The office sector continued to attract both institutional investors and developers during the year, with nearly $1.4 billion worth of capital deployed. Of this, more than 40% was concentrated in Mumbai, followed by Bengaluru, Hyderabad and Delhi-NCR. These deals consisted of both leased out built-up office buildings and land parcels earmarked for commercial use.

“While office utilization rates across cities in India would fluctuate in tandem with infection rates owing to new variants (Omicron), we believe that post each wave, occupiers in India would encourage employees to come back to offices, with their safety and well-being at the forefront of their ‘return to work’ plans,” said Anshuman Magazine, chairman and CEO - India, South-East Asia, Middle East & Africa, CBRE.

Also read: Office gross absorption at 33 mn sq ft in 2021; Start-ups witness rise in commercial leasing: Colliers

According to the data, office leasing in Delhi-NCR rose slightly to 5.6 million square feet in 2021 from 5.5 million square in 2020. In Mumbai, the office absorption increased to 4.1 million square feet from 2.8 million square feet. In Mumbai, office absorption increased to 4.1 million square feet from 2.8 million square feet.

The office space leasing in Bengaluru rose to 12.4 million square feet from 10.9 million square feet. In Chennai, the office space leasing fell to 3.8 million square feet from 4.2 million square feet.

Hyderabad saw absorption of 10.8 million square feet last year as against 7.1 million square feet in 2020. The absorption of office space in Pune fell marginally to 3.4 million square feet from 3.5 million square feet.

Another report by Edelweiss on commercial realty said that while office space leasing at 8.5msf in Q4CY21 (up 31% YoY/99% QoQ) showed continued recovery, supply at 11.7msf (down 8% YoY, up 69% QoQ) eclipsed demand for the ninth consecutive quarter, pushing up vacancies to 16.9% (up 180bps YoY, 30bps QoQ). Demand and supply in CY21 at 20msf and around 37msf were broadly flat YoY.

The ongoing third wave is likely to disrupt the momentum in office demand; this along with large upcoming supply is likely to keep vacancies high and rents under pressure in the near term, it noted.
Moneycontrol News
first published: Jan 14, 2022 07:25 pm
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