Office absorption up 52% in Q4 of CY20 on sequential basis: JLL report

While IT/ITeS continues to grab the lion's share, leasing activity is being driven by increased demand from sectors such as e-commerce, healthcare and FMCG

office space, co-working space — Except for Bengaluru, net absorption of office spaces improved in the other six cities according to the report.

2 min read Last Updated : Dec 29 2020 | 12:03 AM IST

Driven by pre-commitments in new completions during the quarter, the company’s office market continues to recover witnessing a net absorption of 8.27 million sq ft, up 52 per cent in the fourth quarter of Calendar 2020 on a sequential basis. While IT/ITeS continues to grab the lion's share, leasing activity is being driven by increased demand for office spaces from sectors such as e-commerce, healthcare and FMCG, according to a JLL report.

Except for Bengaluru, net absorption of office spaces improved in the other six cities (Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, Pune) according to the report. Hyderabad led the pack with the highest net absorption in Q4 of 2020. While the southern markets of Bengaluru and Hyderabad accounted for more than 50 per cent of the net absorption in the quarter, maximum increase in net absorption was witnessed in Mumbai, Delhi NCR and Chennai.

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“Led by the southern markets of Hyderabad, Chennai and Bengaluru, net absorption levels in 2020 reached 81 per cent of what was observed between 2016 and 2018,” said Ramesh Nair, CEO and Country Head, JLL India.

The office real estate market has been one of the most impacted after the Covid outbreak. While work from home could impact the office market demand by an estimated up to 20 per cent in the medium to long term, this dip will be counterbalanced by increasing demand for office spaces from emerging sectors like healthcare, e-commerce and data centres, says the report. De-densification and splitting of offices are expected to further drive demand.

However, some changes are bound to happen in the space. Flexibility will be the key to speeding up the recovery process. “Landlords will have to be more receptive to the demands of tenants and offer flexible options, in terms of space as well as value. Learnings from the pandemic will also be incorporated in office design along with an increased focus on sustainability and employee wellness,” says JLL.