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Office space leasing down 22% YOY in H1 2021: Colliers

Office Space H1 2021 1536

Pan-India vacant stock rises 42% YOY

Gurugram, 15 July 2021 – The total gross leasing of commercial office spaces in H1 2021 declined 22% YOY to 10.1 million sq feet across the top six Indian cities. The second wave of covid-19 infections and the high probability of a third wave, compounded by slower than expected vaccinations in India has resulted in occupiers seriously adopting a wait and watch attitude over the remaining year 2021 before leasing new spaces and even renewing the leases on their existing offices as most of them do not want to bear expenses for offices that they cannot really use.

“Though South India markets may have witnessed a drop in YOY leasing, we are confident in the markets’ resilience to bounce back in H2 of 2021 as markets begin opening. South India remains a favourable market for technology occupiers who continue to commit to space in the market”, Arpit Mehrotra, Managing Director, Office Services, South India. 

Bengaluru continues to lead the leasing activity with a share of about 43%, followed by Delhi-NCR and Mumbai with a share of 19% and 16% respectively. We expect the leasing momentum to pick up at the end of 2021 with the acceleration of vaccination drives and re-opening of offices in India. All cities except Bengaluru witnessed a drop in leasing YOY. In Bengaluru, large occupiers continued to lease space for their technology centers. Pune witnessed the steepest decline at 74%, due to a prolonged covid-led lockdown in the city.

“The government's initiative to inoculate the general populace has positively impacted the real estate market. Mumbai commercial real estate markets witness many inquiries, which will hopefully result in a quicker recovery”, said Sangram Tanwar, Managing Director, Office Services, Mumbai. 

Animesh Tripathi, Managing Director, Office Services for Pune, added, “while we witnessed a slowdown due to the second wave of Covid-19, we have seen a steady increase of traction in the commercial real estate market as business activities resume in a phased manner. The pandemic has caused a shift in occupiers’ priorities as observed in workspace strategies, focused on wellness and safety of employees along with a flexible portfolio over the traditional mode of operations. The sector hopes for a promising Q4-2021 as the occupiers are planning to resume office operations from 2022.”

On the supply front, H1 2021 witnessed supply of about 12.1 million sq feet, a decline of about 53% from H1 2020. Although supply halved this year, it was still higher than the demand seen during the period, contributing to a further increase in vacancy levels in addition to space rationalisation by occupiers across cities. As a result, overall vacant stock rose by 42% YOY across the top six cities.


H1 2021


Gross Absorption*







Delhi NCR















* in million sq feet 

Source: Colliers Research

“The corporate world has put a substantial step forward in supporting the government to ensure that the vaccination drive becomes a huge success. Employees are not allowed to enter offices without the prescribed vaccinations. 50% occupancy in corporates has been witnessed since early July, and the numbers are increasing. Without the third wave, we could see 75% to 100 % attendance in the office. Residential sales have been at an all-time high, and office transactions are beginning to sneak up—an excellent time to invest in a lease for the times to come”, added Bhupindra Singh, Managing Director, Regional Tenant Representation (India) & Office Services (North India).

Engineering and manufacturing firms bet on expansion. 

During Q2 2021, the IT-BPM sector continues to drive the major demand accounting for about 34% of the total leasing in the top six Indian cities although it came down from its share of 47% in Q1 2021. The average deal size in the IT-BPM is about 41,000 square feet. The engineering & manufacturing sector also continues to have the second highest leasing share in Q2 2021 as manufacturing companies bet on India to set up their global in-house centers. During Q2 2021, the engineering and manufacturing sector’s leasing accounted for about 22% of the total leasing, up from 18% in Q1 2021.

Flexible workspaces accounted for 13% of the leasing in Q2 2021, up from a 5% share in Q1 2021. After a subdued demand of flexible spaces in Q1 2021, operators have started either to open new centres or to expand their existing centres. Hyderabad saw majority of the flexible workspace leasing in Q2 2021 followed by Mumbai with 60% and 20% shares respectively of the total space leased by flexible workspace operators.

According to Siddhart Goel, Senior Director & Head, Research at Colliers India, “a downward revision of the expected GDP growth rate by various local and international agencies as well as the recent low services PMI have added to the cautious approach of occupiers. However, past experience and views from many occupiers suggest that this is temporary phase and that once there is an improvement in the overall situation, leasing could ramp up very quickly given that there is adequate supply at highly competitive rents in most markets. Our recent study at an APAC level also suggests that tech occupiers, who contribute to the bulk of the demand, remain bullish on India’s long terms prospects and that are still committed to growing their overall footprints in the country.” 

About Colliers

Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 67 countries, our more than 15,000 enterprising professionals work collaboratively to provide expert advice to real estate occupiers, owners and investors. For more than 25 years, our experienced leadership with significant insider ownership has delivered compound annual investment returns of almost 20% for shareholders. With annualized revenues of $3.0 billion ($3.3 billion including affiliates) and $40 billion of assets under management, we maximize the potential of property and accelerate the success of our clients and our people. Learn more about how we accelerate success at

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He has expertise in planning, undertaking demand assessment studies and transactional services including marketing strategies based on technical real estate market analysis and has successfully managed leasing and sales assignments for leading corporations, including Nokia,Philips, Mitel, Mavenir Pega, Novartis, Amazon ,United Health Group, Oracle, Accenture, Cognizant Technology, HP, Tieto, Lenovo, NCR,  NTT Data, Motorola, Ernst & Young  to name a few.

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Animesh Tripathi

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