Net office space leasing across seven major cities declined 30 per cent during January-March period at 8.6 million sq ft as corporates deferred expansion plans amid coronavirus pandemic, according to a JLL India report.
The net office space leasing stood at 12.3 million sq ft during the year-ago period.
The new supply of office space fell 40 per cent to 8.6 million sq ft during the first three months of this calendar year.
"The evolving COVID-19 crisis is prompting corporates to re-evaluate their commercial real estate strategies, with a focus on enhancing resilience measures," JLL India CEO and Country Head Ramesh Nair said.
"There will be a greater emphasis on cost management, employee wellbeing and sustainability, and the adoption of flexible working practices as resilience practices ramp up, he added.
According to the data, office space leasing in Bengaluru fell 37 per cent to 2.71 million sq ft from 4.27 million sq ft.
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Hyderabad saw 74 per cent fall to 0.92 million sq ft from 3.55 million sq ft, while demand of the office space in Pune dipped to 0.36 million sq ft from 0.63 million sq ft.
Office space leasing in Kolkata plunged 98 per cent to 0.02 million sq from 0.88 million sq ft.
However, office space absorption in Chennai increased to 0.92 million sq ft from 0.44 million sq ft.
Delhi-NCR too saw marginal increase in leasing to 1.55 million sq ft from 1.51 million sq ft.
Office space leasing in Mumbai jumped to 2.14 million sq ft from 0.98 million sq ft.
"Over the next few months, leasing is expected to be mainly driven by renewals and consolidation activity, Nair said.
With fresh take up of spaces likely to be limited over the next couple of months, landlords might have to sit on locked in capital (completed buildings) for a relatively longer time period, he added.
The strong leasing momentum of 2019 continued in the first two months of 2020 before the pandemic impacted the Indian market in March, said Samantak Das, Executive Director and Head of Research, REIS, JLL.
"Several leasing deals in the final stages of negotiation were deferred as the office market witnessed a net absorption decline of 30 per cent year-on-year. New completions also saw a fall of 40 per cent year-on-year during Q1 2020.
Many office assets in the final stages of completion were stuck owing to delays in obtaining requisite approvals from the government authorities, Das said.