HomeUncategorizedOffice space demand doubles in fourth quarter

Office space demand doubles in fourth quarter

Office space demand during fourth quarter of CY2021 shot up 99% QoQ to 8.5msf which is up 31% YoY, but supply came in at 11.7msf (up 69% QoQ/down 8% YoY). As a result, vacancies rose 30bps QoQ to 16.9% (up 180bps YoY). Bengaluru and Hyderabad generated the bulk of demand.

The major markets of Bengaluru, Hyderabad, the MMR and Pune witnessed a QoQ rise in vacancies. Tech-dominated markets of Bengaluru and Pune though still enjoy single-digit vacancies. Rentals were broadly flat QoQ; developers continue to offer concessions such as lower CAM charges/higher rent-free period.

India’s commercial realty cycle enjoyed a golden period post-CY13 with vacancies declining to 13.2% by CY19-end, from a peak of 19.7% in CY13. In CY19, demand as well as supply at all-India level had scaled new peaks—demand surged 55% YoY to 42msf and supply shot up 46% YoY to 44msf.

However, covid-19 upset the apple cart with CY20 demand and supply coming in at 19.9msf (down 53% YoY) and 36.7msf (down 17% YoY), respectively. Q4CY21 witnessed demand rising 31% YoY/99% QoQ to 8.5msf. Leasing activity picked up with vaccination gaining pace and due to pent-up demand. However, CY21 demand at 20msf is flat YoY and down 52% from the peak witnessed in CY19, indicating the pandemic’s adverse impact.

Ongoing third wave is likely to dislocate the demand momentum seen over the past two quarters. While leasing is expected to improve in H2CY22, it would still undershoot estimated supply (45-47msf) for a third year running. Consequently, vacancies are expected to climb up, putting pressure on rentals.

Subscribe to our newsletter

To be updated with all the latest news from Sawdust

reports

moves

tenders

latest news