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Net absorption of office spaces decreases in Hyderabad in 2021

[ecis2016.org] Owing to uncertainties over the return of employees to offices, net absorption went down by 22% in Hyderabad in 2021, while new completions also declined by 14%

The pre-leasing commitments in Hyderabad was largely intact in 2021 and even the downsizing activity, undertaken by corporates, has been limited. Corporate occupiers are holding on to office spaces, as they believe that occupancies will improve with more people getting vaccinated. Nevertheless, uncertainties existed over the return of employees to offices and this led to slightly lower net absorption of Grade A office spaces in Hyderabad.

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The net absorption went down by 22% in Hyderabad, at 5 million sq ft (msf) in 2021, compared to 6.4 msf in 2020. The new completions also declined by 14% to 9.2 msf in 2021 as against 10.7 msf in 2020, according to a report by JLL India. The larger corporate occupiers went back to their drawing boards to work out a better real estate strategy to seat their employees, especially when the return of workforce is debatable.

Net absorption of office spaces decreases in Hyderabad in 2021

Source: JLL India

 

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As the work-from-home (WFH) regime continued in 2021, vacancies in Hyderabad shot up to an average of 9.8% in 2021 compared to an average of 5% in 2020. The average rent across all the months of 2021 in Hyderabad’s commercial properties, declined in 2021 at Rs 59.1 per sq ft per month compared to an average of Rs 67.6 per sq ft per month in 2020, according to the JLL India report. Landlords were seen accommodating their tenants’ demands to a certain extent, offering rent-free periods at some places. However, the same is not expected to continue for long, as occupancy levels have seen upward trajectory in the last quarter of 2021.

Hyderabad’s commercial space micro markets

Gachibowli locality in Hyderabad contributed a large share in the new completions of Grade A office buildings in 2021. Decent new supplies became operational in Hyderabad with lower occupancy level that drove up the vacancy levels. Some new supplies also came in at Kokapet and the financial district of the Gachibowli submarket. Even in 2022, new supplies are expected to come majorly in these two sub-markets as they emerge as the preferred location of the corporate occupiers. IT/ITeS and e-commerce were two major occupiers of commercial properties in Hyderabad. These industries and healthcare are expected to be the major takers of space in 2022 too, according to the JLL India report.

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Scheduled completions in Hyderabad’s commercial property market

There are many big commercial buildings, which are being constructed and are scheduled to be completed in 2022, like ‘Phoenix Aquila Tower A’ in Gachibowli having gross leasable area of 1.1 msf, ‘GAR Corp Laxmi Inforbahn Tower 8’ in Gachibowli having gross leasable area of 1.5 msf and ‘Phoenix Avance Business Hub H09’ in the city having gross leasable area of 1.2 msf, according to the report.

There are two buildings, which have just been completed – ‘Divyasree Orion Building 8’ in Gachibowli with gross leasable area of 1.1 msf and ‘Salarpuria Knowledge Capital 3’ in Gachibowli with gross leasable area of 1.3 msf. Many global real estate giants have also entered the commercial real estate market of Hyderabad and are constructing Grade A offices that meet international safety and styling standards.

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Warehousing and logistics property market in Hyderabad

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Hyderabad saw net absorption of 3.2 msf of warehousing and logistics space and 1.1 msf of new supply in 2021, according to a report by CBRE.

Net absorption of office spaces decreases in Hyderabad in 2021

The 3PL sector accounted for 32% of the net absorptions in 2021, followed by retail industry at 27% and e-commerce sector at 12% in 2021, according to the CBRE report.

Net absorption of office spaces decreases in Hyderabad in 2021

The biggest deal in Hyderabad’s warehousing and logistics space market in 2021 was of DMart absorbing as much as 3 lakh sq ft rental space in the ‘Independent Warehouse’ located at Western Corridor in Hyderabad. Another major deal was of Flipkart taking up 2 lakh sq ft space in ‘ZeroMile Warehousing Phase 2’ located at Northern Corridor of Hyderabad. Another major rental deal was signed by Reliance Retail which took 2 lakh sq ft space in ‘ZeroMile Warehousing Phase 2’ located at Northern Corridor, said the CBRE report. The 3PL, e-commerce and retail sectors are likely to do well in 2022 and absorb decent warehousing space in Hyderabad. There are many new completions scheduled for warehouse and logistics spaces in the Northern Corridor and Western Corridor in Hyderabad in 2022.

Source: https://ecis2016.org/.
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Source: https://ecis2016.org
Category: Lifestyle

Debora Berti

Università degli Studi di Firenze, IT

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