Pan-India absorption during the year surpassed the annual gross absorption during 2016-2018 by 7%, signaling a strong revival in occupier confidence. Occupancy levels rose in prominent office micro markets across the top 3 cities at the end of 2021 from Q3 2021, led by a gradual revival in demand and fewer occupier exits, the report mentioned. Office gross absorption across the top six cities was at about 33 million sq feet, 10% higher compared to 2020, as per Colliers.
"The year 2021 has emerged to be better than expected, considering the devastating wave we saw during the last year. Demand continues to be led by technology companies. However, we are seeing greater appetite for office space by start-ups. The year 2022 will even be better, even if the concerns of Covid-19 persists. Gross absorption in 2022 will be about 15-20% higher as occupier confidence is back in the market,” Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.
On a city level, all cities, except Bengaluru and Delhi-NCR have surpassed the annual average absorption of 2016-2018. Hyderabad had seen strong recovery gains in 2020 and maintained its streak in 2021 as well, followed by Chennai and Mumbai which gained significant scale during the year due to a strong fourth quarter, building on the momentum witnessed during the previous quarter of the year.
"Office occupancy is likely to rise in prominent office districts with quality grade A stock. Occupiers have already started preferring next-generation offices. In tune with this, we expect supply in 2022 to be around 35-38 million sq feet, 4% higher than 2021 levels." says Vimal Nadar, Senior Director and Head of Research , Colliers India.
In the top three cities, start-ups leased about 2.2 million sq feet of space during 2021, a 56% rise from 2020. The biggest spurt was seen in Delhi-NCR start-ups leased office spaces in Gurgaon largely. This comes at a time when India saw the 42 start-ups becoming uincorns - highest ever.
Flex spaces expanded at a fast pace this year led by occupiers' hybrid and decentralized work plans. During the year flex spaces leased about 4.8 mn sqft of space, a 60% rise YoY. Flex space leasing accounted for 15% of the leasing, compared to 9% share last year. Bengaluru accounted for maximum flex space leasing, followed by Hyderabad and Pune.
In terms of new supply, the year 2021 saw 35 mn sqft of supply, almost at similar levels of 2020 as developers exercised 'wait-and-watch' and aligned new supply in response to market demand. Source