Grade A gross absorption for top 6 Indian cities touches 4.3 million square feet
Gurugram, 20 April 2021 – The engineering and manufacturing sector accounted for the second highest leasing share in the top six Indian cities, after the IT-BPM sector as manufacturing companies bet on India to set up their global in-house centers. During Q1 2021, the engineering and manufacturing sector’s leasing accounted for about 18% of the total leasing, up from 11% in Q1 2020.
The IT-BPM accounted for about 47% of the total leasing, driving demand. The average deal size in the IT-BPM was about 37,500 square feet. Interestingly, EdTech companies accounted for 7% of the total leasing.
Overall, Bengaluru led leasing activity with share of about 47%, followed by Mumbai and Delhi-NCR with a share of 16% and 14% respectively.
"Riding on a strong comeback in Q4 2020, Bengaluru led the office leasing market in Q1 2021, capturing 47% of the market in Q1 2021. Bengaluru continues to remain the hot spot for occupiers due to its talent pool and economic business conditions”, said Arpit Mehrotra, Managing Director, Office Services (South India), Colliers.
Flexible workspaces accounted for 5% of the leasing in Q1 2021, down from 11% share in Q1 2020. Operators continued to be cautious on expansion and instead focused on opening centers only with established demand from enterprises. Flexible workspaces saw corporate clients leasing over 11,800 seats with them during the quarter. Bengaluru saw majority of the flexible workspace leasing, with a deal each in Mumbai and Pune.
"Long term commitments made for upcoming projects will continue to gain momentum as corporates get future-ready with modified footprints. Occupiers will not incur CAPEX, and managed office(s) signups will be a matter of immense prudence”, said Bhupindra Singh, Managing Director, Regional Tenant Representation (India), Colliers.
|
Overall city leasing share |
|
|
Bengaluru |
47% |
|
Chennai |
7% |
|
Delhi NCR |
14% |
|
Hyderabad |
9% |
|
Mumbai |
16% |
|
Pune |
7% |
Source: Colliers India
“Mumbai will see a spurt in demand as landlords have aligned expectations to the current market situation. Grade A office spaces will be in demand. Industries that are not directly affected by the pandemic are showing healthy recovery from the current level”, said Sangram Tanwar, Managing Director, Office Services (Mumbai) at Colliers India.
Animesh Tripathi, Senior Director, Office Services (Pune) at Colliers India added, “Unlike the first wave, when the leasing activity became very slow, we see that occupiers are busy deliberating their real estate strategy this time and continue to show interest in leasing new spaces while keeping in mind the new workplace strategies timelines for occupation.”
According to Siddhart Goel, Senior Director & Head, Research at Colliers India, ”2021 started off on a cautious note for the commercial office sector as occupiers are planning to increase their leasing activities mainly in the second half of the year basis the success of Covid-19 vaccination. Consequently, even developers have controlled their supply to ensure that vacancies did not increase beyond comfort levels. Further, as anticipated by us, many occupiers are leasing in flexible workspaces to provide their employees with more space options as many employees are longing to take a break from continuously working from home but are not keen on undertaking long commutes to their existing office locations.”
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