Office space leasing increased by 89 pc QoQ in Q3: Colliers

Top six cities in the country noted about 10.3 million sq ft of office gross absorption in Q3 2021, the highest volume recorded since Q1 2020, according to a report by professional services and investment management company Colliers.

After a devastating pandemic second wave in the second quarter, the overall absorption numbers rose by 89 per cent QoQ as occupiers planned for a gradual re-entry and closed deals that were on-hold, said the report.

It further said that IT sector-driven cities Hyderabad, Bengaluru and Pune accounted for 62 pc of gross absorption in Q3 2021. With increased number of fully vaccinated employees returning to their workplaces coupled with fewer restrictions on mobility, the office market is showing strong signs of revival.

“The quarter has brought in much-needed cheer for the market. Large deals made a comeback, led by demand from flexible workspace operators. Decision-making by occupiers has become quicker than in 2020. We can expect the optimism to strengthen over the upcoming quarters, provided there is no third wave,” said Ramesh Nair, Chief Executive Officer, India, & MD, Market Development, Asia, Colliers.

After an average performance in Q2 2021, Hyderabad emerged as one of the resilient cities in terms of demand-supply dynamics. For the first time, Hyderabad had the maximum share in leasing volume at 2.5 million sq ft surpassing Bengaluru, as occupiers focused on large block deals and even leasing entire buildings.

BFSI and flexible workplace sectors had the maximum share in leasing volume accounting for 66 pc of the total demand in Hyderabad. Rai Durg saw the maximum leasing traction accounting for 53 pc of the demand, while Hitec City contributed 40 pc. On YTD-basis, Bengaluru continues to be the market leader.

Leasing share by flexible workspace operators also rose in Q3 2021 owing to high demand from occupiers looking for managed spaces and short-term leases to tide over uncertain times. Share of flexible workspaces in leasing increased to 26 pc in Q3 2021.

The quarter saw the highest supply since Q2 2020 at 10.8 million square feet in Q3 2021 with Hyderabad and Pune contributing the maximum share at 29 pc and 25 pc respectively.