36% Decline in Office Leases: Major Issue for Big Cities!

 Significant Drop in Office Leases

In India's top 7 major cities, office leasing volumes dropped by approximately 36% in the January-March quarter compared to the previous year. As a result, only 5.5 million square feet of office space has been reactivated, according to JLL.

 Impact of the COVID-19 Pandemic

Due to the COVID-19 pandemic, most employees in India have been working from home, making office spaces redundant for many companies. Employees have been working from home for almost a year without any adverse effects on business operations.

 Cost Reduction

As a result, companies have not only reduced but also closed many office spaces. From large corporations to small businesses, companies are reducing expenses and providing convenience to employees by continuing to have 60 to 80 employees work from home.

 Decreased Demand for Offices

Consequently, the demand for office spaces in major cities has significantly decreased. However, the rental rates for office spaces have remained relatively stable, which is beneficial for the office real estate sector.

 Mumbai Hit the Hardest

The office space in Mumbai was the most affected, shrinking from 8.6 million square feet in January-March 2020 to 5.5 million square feet in January-March 2021. In Bangalore, which has a large number of offices, the space decreased from 2.7 million square feet to 2.2 million square feet.

 New Office Spaces

Meanwhile, newly constructed office spaces increased by approximately 56% during this period. However, due to the low demand in the market, the office real estate sector has been significantly impacted.