Office leasing up 97% YoY in Jan-March, Omicron impact muted: CBRE

While several IT firms have shifted to a permanent 'work from anywhere' model for their staff, leasing activity was driven by tech companies, with a 34% share

Even as work from home continues as the new normal, office leasing activity in India grew by 97 per cent on a year-on-year basis in the first quarter (January-March) of  the calendar year 2022, says a report by real estate consultancy firm CBRE.

While a multitude of IT firms have shifted to a permanent ‘work from anywhere’ model for their employees, leasing activity was driven by tech (technology) corporates in the first quarter with a 34 per cent share.

This was followed by BFSI (Banking, Financial Services, and Insurance) firms (17 per cent), flexible space operators (13 per cent), engineering & manufacturing (12 per cent) and research, consulting & analytics (11 per cent) firms.

“Bengaluru, Chennai and Delhi-NCR dominated absorption during the quarter, accounting for almost two-thirds of the transaction activity,” the report found.

Anshuman Magazine, Chairman & CEO-India, South-East Asia, Middle East & Africa, CBRE said, “With the government’s evolving Covid-19 protocols and recovery in office leasing in 2021, we expect the positive momentum to further strengthen in 2022.”

As economic recovery continues to gain momentum, the consultancy expects the increase in leasing activity to bring a new focus on large-sized and high-quality buildings by developers to differentiate their assets and attract occupiers.

Notably, the growth has been recorded despite the quarter being marked by the third wave of COVID-19 infections, caused by the Omicron variant of the virus.

“The Omicron wave mostly panned out in January. There was obviously a pent-up demand (from corporates) from last year, but February and March were mostly normal months. There was also a difference between the second and third wave in terms of the mortality rate — we also have to consider the fact that when Omicron hit, most of the corporate workforce had been vaccinated. The wave was marked by largely micro, localised restrictions,” Abhinav Joshi, head of research at CBRE, told Business Standard.

CBRE also found that the sectoral recoveries in IT, BFSI, and others were marked by large-scale hiring, with a lot of corporate real-estate occupiers finding themselves crunched for space should a full-fledged return to office take place, which also provided an impetus to leasing activity.

“There was a lot of momentum as the year progressed. The second half of 2021 saw 65 per cent of the activity of the entire year,” Joshi said.

CBRE expects the office leasing momentum to continue going forward. Supply would continue to be dominated by Bangalore, Hyderabad and Delhi-NCR, which would drive close to 70 per cent of the completions in 2022, the report said.