Office Leasing in India Exceeded 2016-2018 Average Office Leasing Numbers in 2021

This is surely good news for commercial real estate in India. According to prominent real estate companies, office gross absorption in India's top six cities was over 33 million square feet, a 10% increase over 2020.

The movement of office spaces on lease in the Indian real estate market indicates the growth and recovery story in a big way. Pan-India absorption in 2017 exceeded yearly gross absorption in 2016-2018 by 7%, indicating a robust rebound in occupier confidence.

According to the survey, occupancy levels in key office micromarkets across the top three cities increased towards the end of 2021 from Q3 2021, owing to a modest resurgence in demand and fewer occupier departures.

On a city-by-city basis, all cities, with the exception of Bengaluru and Delhi-NCR, have exceeded the yearly average absorption of 2016-2018. 

Hyderabad saw substantial recovery gains in 2020 and 2021, followed by Chennai and Mumbai, which gained considerable scale during the year owing to a strong fourth quarter that built on the momentum experienced in the preceding quarter of the year.

In the top three cities, start-ups rented around 2.2 million square feet of space in 2021, a 56 percent increase from the previous year.

The greatest increase was witnessed in Delhi-NCR, as start-ups mostly rented office space in Gurgaon. This comes at a time when 42 start-ups in India have become unicorns, the largest number ever.

This year's flex space expansion has been fueled by occupiers' hybrid and decentralised work arrangements. During the year, flex spaces leased over 4.8 million square feet of space, a 60 percent increase year on year.

Flex space leasing accounted for 15% of total leasing, up from 9% the previous year. Bengaluru has the most flex space lease, followed by Hyderabad and Pune.

In terms of new supply, the year 2021 witnessed 35 million square feet of supply, nearly identical to the levels seen in 2020, as developers exercised care and oriented new production in response to market need.

The year 2022 looks promising for commercial real estate across India and that would surely rub on to the residential real estate market in India too.