Office Space Leasing Jumps 26% To 13 Million Sq Ft During September 2022 Quarter

Office space leasing in India during the September 2022 quarter stood at 13 million square feet (msf), a 26 per cent jump as compared to the corresponding quarter last year. Vacancy levels declined 30 basis points to 16.7 per cent and the demand is likely to cross 50 msf by the end of the year led by pent-up demand, according to a report by Colliers.

“Industrial and warehousing demand stood at 6.7 msf in Q3 2022, highest since Q1 2021. Delhi-NCR accounted for the highest share at 56 per cent, followed by Pune at 16 per cent share. 3PL operators continue to drive demand with 42 per cent leasing share,” said the report, titled ‘reQ Real Estate Quarterly Q3 2022’.

Institutional Investments in the Indian real estate market closed at $1 billion during the third quarter of 2022, a 54 per cent jump YoY. The investment volume in 2022 is likely to cross 2021 levels amid the positive business sentiment.

Several banks have raised their lending rates following the RBI’s repo rate hike. However, improved business confidence and retail spending during the festive season will likely support the demand activity, the report said.

Ramesh Nair, CEO (India) and managing director (market development-Asia) of Colliers, said, “The Indian real estate sector has bounced back sooner than expected if the first nine months of 2022 are anything to go by. Office demand has witnessed a twofold rise YoY during YTD 2022 at 40.6 mn sq feet and is likely to cross 50 mn sq ft towards the year-end. However, concerns about the upcoming global recession might trigger some short-term volatility in the market over the next 2-3 quarters. At the same time, the Indian market is relatively resilient and the growing economy will continue to fuel demand across various asset classes.”

The report said real estate due diligence can capture a slice of the 300 mn sqft pie of existing and upcoming commercial office buildings. The top-six cities in India have about 120 mn sqft of ageing Grade-A stock, which is more than 15 years old. Due Diligence can help developers and landlords understand the scope of upgradation and achieve higher traction from occupiers, especially in the prime micro-markets of major cities.

“Modern technologies at workplaces can improve operational efficiency as well as employee productivity. Such an investment can reap remarkable benefits and returns for both, the landlord and occupier. They can look at minimum efficiency reporting value (MERV) filtration up to MERV 15 to improve and balance the air quality, and other recognised standards for acceptable IAQ and ventilation,” Colliers said in the report.

After a gap of two years, return to offices has gathered momentum with ebbing COVID-19 cases, signifying positive occupier confidence. At the same time, about 74 per cent of the occupiers are looking towards distributed workspaces as a strategy to shift from location-centric to people-centric workspaces.

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