India is a large office market and typically leases ~35 – 40 million (‘MM’) square feet (sf) of Grade A quality office space per annum. Over the last two decades, India has established itself as a knowledge processor for the world. Many Fortune 500 companies across technology, financial services, IT services, consulting, manufacturing, etc. have setup large centres that cater to their global businesses. According to JLL’s Q2 2021 office market update, net office absorption averaged ~35MM sf between 2016 and 2019.
However, the onset of COVID in Mar 2020 dealt a massive blow to the office sector. Unlike retail malls, there wasn’t an immediate loss of rent from spaces leased to high quality companies (as they honored their contracts), but new leasing and renewals plummeted. Net office absorption slumped to ~26MM sf in 2020 from its usual level of ~35MM+ sf per annum.
As corporates adopted Work-from-Home (WFH), working through digital tools and online meetings became the norm. An early expectation was that the flexibility and cost arbitrage offered by WFH would lead to long-term increase in office vacancies. However, as the year panned out and the first lockdown was lifted, investment and leasing trends for commercial offices, across multiple parameters, have shown resilience.
