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Office Absorption Rises to 3-year High
on Strong Demand

Mkt sees 46% growth to 38.25m sq. ft. across
top 7 cities this year

Mumbai: The commercial real estate market hit drastically by the Covid-19 pandemic has made a strong comeback in 2022 with steady recovery in demand for office spaces across key cities of India. The office property market has not only shown resilience but also overcome the pandemic-driven challenge of the work-from-home model and emergence of hybrid work formats to register a record performance. The demand pipeline for office real estate and pre-commitments continue to be healthy and is expected to propel the performance further in 2023.

India’s office market net absorption across the top seven cities for the full year rose 46% to 38.25 million sq. ft., a three-year high. The performance has surpassed the five-year pre-pandemic average (2015-2019) by 3.1% as well and is second only to the 2019 net absorption numbers for the past 10 years, showed data from JLL India. “India’s momentum as an actively growing office market with new job creation, its established and further-growing credentials as a tech and innovation hub, companies’ expansion plans remaining intact, and more firms looking at India from a talent perspective are all strong growth drivers for the office market to have put in such a performance for 2022,” said Rahul Arora, head office leasing advisory India & MD, Karnataka & Kerala at JLL India.

A strong year with record-high completions and previous pre-commitments being honored by most occupiers as return to work has gained momentum across all industries pushing office occupancies higher, has supported the net absorption during the year.“There have been almost 8 lakh net new hires in the IT sector that would lead to an increased office demand. Employees have returned to office and the job market has rationalized post the disorder over the last 2 years. Increasing growth in services and consulting sectors and with their inherent apprenticeship culture, training and physical presence will continue to play a key role in office demand,” said Quaiser Parvez, CEO, Nucleus Office Parks, a Blackstone Group entity.

According to him, the number of global capability centers (GCCs) will continue to increase with additional 400 new centers expected in the next three years. ‘The Indian tech sector’s revenue is expected to increase by 84% from $190 billion in 2020 to around $350 billion with digitization services expected to increase 4 times from 2020 to 2025. All of this will lead to a strong
demand for offices, and 2023 is also expected to see nearly 50 million sqft gross leasing.

Reference by The Economic Times

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