Office net absorption down 30pc in Q1-2020 from 2019 peak
Net absorption was recorded at 8.6 mn sq ft, with pre-commitments accounting for 4.9 mn sq ft
Mumbai: India’s office market across seven major cities remained resilient in the first quarter of 2020, despite a challenging global economic climate. Approximately 52-mn sq ft of Grade A office space was completed and more than 46 mn sq ft absorbed in 2019 according to the ‘India Office Market Update Q1-2020’ released by JLL, India’s largest real estate consultancy firm today.
“Office assets offered high growth and stable returns. Investors, domestic and foreign alike chased investment ready commercial assets and development opportunities in top cities,” adds the report. However, the impact of the COVID-19 pandemic became more apparent in March as most businesses defer their real estate decisions. Net absorption of office spaces in Q1 2020 witnessed a decline of 30% from the peak observed in Q1 2019. IT-ITeS (56%) as well as co-working (13%) occupiers drove leasing activity during the quarter. Furthermore, construction activity and the process of obtaining requisite approvals from the government also slowed down in the beginning of March, in line with growing concerns of the impact of COVID-19. “New completions were recorded at 8.6 mn sq ft in the first quarter of 2020, a 40% drop as compared to the same period last year,” adds the report.
“The evolving COVID-19 crisis is prompting corporates to re-evaluate their commercial real estate strategies, with a focus on enhancing resilience measures. 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,” said Ramesh Nair, CEO & Country Head, JLL. “Over the next few months, leasing is expected to be mainly driven by renewals and consolidation activity. 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