News: Net absorption of office spaces to reach 20 million sq ft during 2021: Report-26-02-2021
Despite concerns about potential oversupply in select micro-markets and muted demand, new supply in 2020 of 38.1 million sq ft was recorded, a 2.4% decline year-on-year.
NEW DELHI: During 2021, net office space absorption is expected to reach 20 million sq ft, similar to 2020, according to a recent report by Colliers International India. Net absorption across major markets in India was 20.6 million sq ft in 2020, a decline of 42.8% year-on-year.
After seeing a 42.8% decline in demand in 2020, the company believe that occupiers will optimise their portfolios in 2021 and 2022. Occupiers approaching lease expiration are undertaking portfolio optimization efforts by relocating to cheaper and/or smaller offices.
For example, in 2021, leases expiring total about 81 million sq ft, with 65% of these being smaller than 10,000 sq ft. Delhi-NCR, especially, is witnessing this trend with occupiers moving to locations such as Golf Course Extension Road in Gurugram.
About 45% of the demand was led by technology firms with larger companies still considering expansion in recently completed projects with better wellness and hygiene standards., according to the report.
"Technology companies are expanding and are likely to fuel demand for office space over the next two years. Over the next three years, technology companies dealing with digitization, artificial intelligence, machine learning and robotics ought to expand led by increasing demand for such services. We expect tech companies to continue to look at markets like Bengaluru, Hyderabad and Chennai," said Arpit Mehrotra, managing director, Office Services (South India) of the company.
Despite concerns about potential oversupply in select micro-markets and muted demand, new supply in 2020 of 38.1 million sq ft was recorded, a 2.4% decline year-on-year. Bengaluru, Hyderabad and Delhi NCR drove the bulk of new supply.
During 2020, flexible workspace operators leased about 3 million sq ft of space, accounting for 9% of the total leasing.
"Occupiers will continue to look for flexibility from developers as employees gradually return into offices in H1 2021. Managed office and enterprise solution players will play a key role in the overall take-up of offices spaces throughout 2021," said Bhupindra Singh, managing director, Regional Tenant Representation (India) of the company.
