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Flexible workspaces accounted for 5 per cent of the 4.3 million square feet leasing in Q1 2021, down from 11 per cent share of the 12.2 million square feet in Q1 2020. Operators continued to be cautious on expansion and instead focused on opening centres only with established demand from enterprises.
Flexible workspaces saw corporate clients leasing over 11,800 seats with them during the quarter. Bengaluru saw majority of the flexible workspace leasing. Mumbai and Pune had one deal each.
"Long-term commitments made for upcoming projects will continue to gain momentum as corporates get future-ready with modified footprints. Occupiers will not incur capex and managed offices sign-ups will be a matter of immense prudence,” said Bhupindra Singh, Managing Director, Regional Tenant Representation - India, Colliers.
On the leasing front, the engineering and manufacturing sector accounted for the second highest share in the top six Indian cities, after the IT-BPM secto,r as manufacturing companies bet on India to set up their global in-house centres. During Q1 2021, the engineering and manufacturing sector’s leasing accounted for about 18 per cent of the total leasing, up from 11 per cent in Q1 2020.
The IT-BPM accounted for about 47 per cent of the total leasing, driving the demand. The average deal size in the IT-BPM was about 37,500 square feet. Interestingly, EdTech companies accounted for 7 per cent of the total leasing.
Overall, Bengaluru led leasing activity with a share of about 47 per cent, followed by Mumbai and Delhi-NCR with a share of 16 per cent and 14 per cent, respectively.
"Riding on a strong comeback in Q4 2020, Bengaluru led the office leasing market in Q1 2021, capturing 47 per cent of the market in Q1 2021. Bengaluru continues to remain the hot spot for occupiers due to its talent pool and economic business conditions,” explained Arpit Mehrotra, Managing Director, Office Services - South India, Colliers.
According to Siddhart Goel, Senior Director & Head, Research at Colliers India, 2021 started off on a cautious note for the commercial office sector as occupiers are planning to increase their leasing activities mainly in the second half of the year basis the success of Covid-19 vaccination.
Consequently, even developers have controlled their supply to ensure that vacancies did not increase beyond comfort levels. Further, as anticipated by us, many occupiers are leasing in flexible workspaces to provide their employees with more space options as many employees are longing to take a break from continuously working from home but are not keen on undertaking long commutes to their existing office locations.
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