Office space leasing up 4 pc in Jan-Mar; demand to drop in 2020 due to COVID-19: Colliers

Office space leasing rose by 4 per cent during January-March across seven major cities to 12.2 million sq ft, but absorption will drop this year because of adverse impact of coronavirus outbreak, property consultant Colliers said.

The consultant has pegged office space leasing at 45-50 million sq ft during the 2020 calendar year, a drop from 58.6 million square feet achieved during the last year.

"The year 2020 started off on a positive note, with relatively lower impact from the ongoing COVID-19 that began spreading faster post mid-March," Colliers said in a report.

During Q1 2020, office gross absorption across the top seven cities rose marginally by 4 per cent to 12.2 million square feet.

 

Bengaluru accounted for about 30 per cent of the total gross absorption, followed by Pune with a 18 per cent share and Delhi-NCR with 15 per cent.

"While Indian market is likely to see adverse impact from the ongoing COVID-19 pandemic, India is relatively better placed in terms of economic growth," Colliers India Managing Director and Chairman Sankey Prasad said.

Going ahead, demand from resilient sectors such as technology should be stable, with enquiries from sectors such as pharmaceuticals, e-commerce and logistics also increasing, he added.

Megha Maan, senior associate director, Research, Colliers said, "While the first quarter of the year has started on a positive streak, we expect overall leasing in upcoming couple of quarters to be slow, led by delayed decision making by occupiers. Hence, we are projecting gross absorption of 45-50 msf this year, lower than 2019."

Across the seven major cities, the IT-BPM sector continued to dominate the leasing activity in Q1 2020, accounting for 55 per cent share in leasing.

Flexible workspace operators accounted for about 15 per cent of the gross leasing in Q1 2020.

Among cities, Bengaluru witnessed office space leasing of 3.7 million sq ft, while Pune's gross absorption zoomed 90 per cent to 2.2 million sq ft during Q1 2020.

In Delhi-NCR, the gross absorption rose 21 per cent year-on-year to 1.8 million sq ft.

Office space leasing in Mumbai stood at 1.7 million sq ft, Chennai1.5 million sq ft, Hyderabad 1.2 million sq ft and Kolkata 0.19 million sq ft during January-March 2020, the report said.