As the pandemic drags into 2021, office space transactions volume will remain subdued over the first-half of calendar 2021, said Siddhart Goel, Senior Director & Head-Research India at Colliers International.
“However, we expect technology firms to continue to lead office space demand in Bengaluru, Hyderabad, Pune, Gurgaon and Noida, where some firms have announced plans to ramp up the hiring process,” he added.
In its latest report, Colliers International India Market Outlook 2021 said that for 2021, it forecasts a net absorption in office space to be about 20 million sq feet, similar levels of 2020. It expects that most occupiers will continue to operate low headcount offices as they follow a hybrid model of allowing employees to work both from home and the office.
In Calendar 2020, leasing activity remained sluggish as the uncertain economic environment and business conditions brought on by Covid-19 nudged occupiers to postpone their decisions and reassess their real estate portfolios.
Net absorption across India’s major markets stood at 20.6 million square feet, a decline of 42.8 per cent year-on-year (YoY). “Occupiers focused on portfolio optimisation by relocating, consolidating and downsizing,” said Goel.
Flexi workspace demand
Goel said Flexible workspace is expected to pick-up in demand in 2021 as several large corporates and start-ups are in the process of reviewing their real estate portfolios and may consider flexible workspace to meet their needs through 2022.
Demand from flexible workspace providers remained subdued in 2020 due to stringent lockdowns and social distancing protocols. “We saw a few flexible workspace operators reduce their space or cancel the LOIs as demand remained muted across major markets,” said Goel.
“Despite concerns about potential oversupply in select micro-markets and muted demand, we saw new supply in 2020 of 38.1 million square feet, a 2.4 per cent decline YoY. Bengaluru, Hyderabad and Delhi NCR drove the bulk of new supply,” he said.
He added, “Muted demand prompted developers to adopt a more accommodative stance when negotiating lease terms as they focused on occupancy levels.”