The workplace market place in Mumbai witnessed a net absorption of .61 million sq ft in Q2 2021, an boost of 36% when compared to that in Q2 2020. On a sequential basis, the city has recorded more than double net absorption, from the .24 million sq ft as seen in Q1 2021. Nevertheless, net absorption levels stay under the quarterly typical of 1.54 million sq ft witnessed involving 2016 and 2019.
In terms of places, Navi Mumbai, Thane and SBD North (primarily Andheri-Kurla Road) had been the preferred places, driving leasing activity in Mumbai. In Q2 2021, these 3 submarkets accounted for almost 80% of the general net absorption. Sector-sensible, BFSI, manufacturing and flex space operators dominated leasing activity throughout the quarter.
The quarter also saw robust new completions of 2.54 million sq ft with 3 new projects obtaining completed. As new completions outpaced net absorption, the vacancy price improved by 110 bps to 16%. At the exact same time, general typical city rents in Q2 2021 remained variety bound at Rs 124 – 125 per sq ft per month.
“As demand for flex spaces grows, flex space operators are expanding their presence in the city. Overall city rents have been stable barring a marginal drop in a few micro-markets. However, it is important to note here that rents are expected to witness steady growth once the market stabilizes post recovery from the impact of COVID-19,” stated Karan Singh Sodi, Regional Managing Director, JLL India.
Source: Real Estate Intelligence Service (REIS), JLL Research
India’s net workplace absorption stood at 4.39 million sq ft in the second quarter, representing 32% year-on-year development in big cities, according to JLL. Given the strict nationwide lockdown across the nation in the second quarter, net absorption dipped by 16% versus the earlier quarter. However, the quarter-on-quarter drop was decrease than the 61% throughout the exact same period last year when the 1st wave of the pandemic hit, displaying the market’s enhanced resilience.
“Compared to the big dip that we had seen in the Q2 2020 due to the first wave, the market showed more resilience in Q2 2021 when hit by the second wave. The strength displayed by the office market in India since the pandemic owes much to the fact that the IT/ITeS sector has been largely unaffected by the economic downturn. IT/ITeS occupiers continued to account for a majority of the office leasing activity in 2020 at around 50%. In 2021, we expect the IT/ITeS sector to remain the key occupier group while demand from emerging sectors such as e-commerce, manufacturing and healthcare is likely to increase further,” stated Dr. Samantak Das, Chief Economist and Head Research & REIS, JLL.
Pre-leasing commitments have been largely intact and downsizing activity by bigger corporates has been restricted. Occupiers are holding on to spaces with the belief that occupancy at offices will begin to enhance as the nation gets vaccinated. While a timeline for the return to workplace is nonetheless uncertain, the next two quarters are vital. If the nation can retain the third wave in verify and assure that most of the active workforce gets vaccinated, the shift back to workplace will be more feasible and sustainable.
With anticipated ramp up in vaccination across the nation in the backdrop of a gradual reduction in the quantity of circumstances, the second half of the year is anticipated to witness an improved momentum in workplace space leasing. Net workplace absorption in 2021 is probably to stay flat or may well develop slightly from the 25.6 million sq ft accomplished in 2020, in case there are no additional lockdowns. However, it will stay under the typical annual levels of ~35 million sq ft witnessed more than 2016-19.