Office leasing down 22% in H1 2021 as demand catches Covid-19 bug: Report

Leasing of commercial office space in six Indian cities in H1 2021 fell 22 per cent year-on-year (Y-o-Y) to 10.1 million sq. feet, said a report Thursday.

Covid-19 infections and slow vaccinations have resulted in people waiting out rest of the year 2021 before leasing or renewing leases on their existing offices, said property consultancy Colliers in a report.

“Though South India markets may have witnessed a drop in Y-O-Y leasing, we are confident in the markets’ resilience to bounce back in H2 of 2021 as markets begin opening. South India remains a favourable market for technology occupiers who continue to commit to space in the market,” said Arpit Mehrotra, managing director, office services, South India, Colliers.

Bengaluru continues to lead in leasing, with a share of about 43 per cent. It is followed by Delhi-NCR and Mumbai, with a share of 19 per cent and 16 per cent. "We expect the leasing momentum to pick up at the end of 2021 with the acceleration of vaccination drives and re-opening of offices in India. All cities except Bengaluru witnessed a drop in leasing YOY. In Bengaluru, large occupiers continued to lease space for their technology centers. Pune witnessed the steepest decline at 74 per cent due to a prolonged covid-led lockdown in the city", said Colliers.

H1 2021 witnessed supply of about 12.1 million sq. feet of commercial office space: a decline of about 53 per cent from H1 2020. Supply halved this year, but was higher than the demand in the period. As a result, overall vacant stock rose by 42 per cent Y-o-Y across the six cities.