HYDERABAD: The year 2022 is likely to emerge as the best year for office space leasing, with absorption already crossing 5 million sq feet in Hyderabad, and is expected to do more in the fourth quarter of the calendar year.
The spurt in leasing is driven by a spillover in demand from the last two years. Occupiers who were postponing their leasing decisions during 2020 and H1 2021 are now even more optimistic about leasing space. While hybrid working continues to be the mainstay, occupiers are not shying away from leasing new large spaces.
Office absorption in Hyderabad during Q1-Q3 2022 touched 5.6 million sq.ft, which was an increase from 3.7 million sq.ft from the same period last year. A report by Colliers said that Mumbai, Hyderabad and Pune are inching towards reaching historic levels in terms of office absorption by the end of the year.
Across the country, leading tech and flex occupiers leased 19.8 mn square feet of space during the year, accounting for nearly half of the total leasing across the top six cities including Mumbai, Hyderabad and Chennai.
The report said that vacancy levels declined on a quarterly basis to 16.7 per cent, led by robust demand amidst limited new building completions. Higher enquiries and pre-commitments are likely to keep vacancy levels range bound in the next three months.
The year also saw greater supply in the market, with new completions rising 1.5 X YoY to 32.8 mn sq feet. This gave a thrust to leasing, as many of the buildings had prior pre-commitments. Bengaluru and Hyderabad accounted for 1/4th each in total supply during the year.
“We are at an exciting stage in the market wherein demand and supply are ramping up. Tech companies and flex operators together accounted for about 50 per cent of the total demand during the first three quarters of this year.
Vacancy levels lowered during the quarter for the second time in a row by 30 basis points amidst robust office market growth,” said Ramesh Nair, CEO, India, and Managing Director, Market Development, Asia, Colliers.