In seven cities, net leasing of office space to reach 90-95% of the pre-Covid level FY 23 Report

“Net leasing of commercial office space (Grade-A) will reach 90-95 percent of the pre-pandemic level next fiscal, up from an estimated 70-75 percent in the current one, with a return to office gathering steam and new hiring picking up strongly,” said a statement.

According to rating agency Crisil, on new hiring and retrieval of employees to workspace, during the next fiscal year, across seven major cities the net leasing of the office space will reach 90-95 percent of the pre-COVID-19 level. Net leasing refers to the consumption of new office spaceless areas vacated by renters.

“Net leasing of commercial office space (Grade-A) will reach 90-95 percent of the pre-pandemic level next fiscal, up from an estimated 70-75 percent in the current one, with a return to office gathering steam and new hiring picking up strongly,” it said in a statement.

The growth in net leasing and constant rental collections, which had not declined considerably, will confirm that the credit profiles of commercial real estate holders continue to remain stable, Crisil said.

The agency said, during the last fiscal year net leasing almost halved to 20 million square feet as consumption of new spaces was tepid and some renters even vacated office premises.

The statement said, “Leasing remained modest in the first half of this fiscal, too. With supply exceeding demand, market occupancy reduced to 85 percent in September 2021, from the pre-pandemic mark of around 89 percent in March 2020.

“That said, the leasing activity is expected to pick up from the fourth quarter of this fiscal and occupancy to improve to around 87 percent next fiscal, closing in on the pre-pandemic level.”

As of March 2021, the top-seven cities which include Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai Metropolitan Region, Delhi-NCR, and Pune — have an operational stock of around 625 million square feet.