HomeNewsOffice space absorption in major cities grew 10% in 2021

Office space absorption in major cities grew 10% in 2021

office spaceA report by property consultant Colliers has revealed a 10% growth in office absorption in major cities during last year as compared to 2020. Overall office gross absorption across top six cities was at about 33 million square feet (sq ft) in 2021 which was 10% higher than 2020, said the report.

On a city level, all regions except Bengaluru and Delhi-NCR surpassed the annual average absorption of 2016-2018. Hyderabad had seen strong recovery gains in 2020 and that trend was maintained in 2021. It was followed by Chennai and Mumbai which gained significant scale during the year which can be attributed to a strong fourth quarter building on the momentum of the previous quarter.

Submarkets within the cities such as NCR’s MG Road, Mumbai BKC and Bengaluru’s SBD and Whitefield saw higher occupancy quarter on quarter after a gap of at least six quarters, said the report. At the same time, total pan-India vacancy levels stood at 18.5% in the fourth quarter of 2021, a 40-basis point increase from the previous quarter.

Pan-India absorption during the year surpassed the annual gross absorption during 2016-2018 by 7%, signalling a strong revival in occupier confidence. Occupancy levels rose in prominent office micro markets across the top three cities during the fourth quarter of 2021 from the previous one, led by a gradual revival in demand and fewer occupier exits.

In terms of new supply, the year 2021 saw 35 million sq ft, almost at similar levels of 2020 as developers went into ‘wait-and-watch’ mode and aligned new supply in response to market demand.

Recently delivered buildings are witnessing greater traction as occupiers consolidate their portfolios in Grade A buildings with better wellness standards. A similar trend is seen in other cities where occupiers are exploring next-generation offices to move into as developers and occupiers are committed to future-proofing office spaces, the report said.

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