Covid-19 Impact: Companies discover employees working from home as viable alternative to costly office spaces

More companies are discovering the viability of employees working from home (WFH) as an alternative to occupying costly office spaces.

Commercial real estate has been a reliable mainstay of the Indian real estate sector, remaining vibrant even while residential property remained in the doldrums.

“Many IT/ITeS companies and other corporates are now warming up to the notion of shifting a significant chunk of work, be it coding or non-client-facing back-office functions, out of offices and into their employees’ homes,” said Ashutosh Limaye, Director & Head - Consulting, Anarock Property Consultants.

“Now, the coronavirus has thrown a serious spanner into the works of this lucrative real estate segment, at least for the next two quarters,” he added.

Leasing slowdown

Anurag Mathur, CEO, Savills India, too confirmed that the office market is expected to see moderate to strong recovery in 2021. “Office space leasing is likely to slow down in Q2-Q32020 due to tenants re-programming their office needs. Fresh office supply is in temporary pause and high risk to co-working co-providers with large exposure to leases and rolling monthly contracts,” he said.

Confirming the office space leasing slowdown, Sankey Prasad, Chairman and Managing Director at Colliers International India, said, “While occupiers review their business continuity plans, we do not expect any near-term downward movement in commercial rents due to Covid-19, led by the strong underlying commercial office market.”

“We anticipate leasing delays of up to a quarter. If the current lockdown is extended, we can expect delays of up to two quarters,” he added.

Market dynamics changing

According to Limaye, WFH is obviously not a catch-all solution ― many business verticals and functions still require employees to work in an office setting. A large chunk of work needs constant monitoring and professional infrastructure which only an office setting can provide. Nevertheless, market dynamics are changing quickly now.

On co-working, Limaye said, “It is likely to see subdued demand over the next few quarters, but will also see the fastest revival ― the pandemic pressures will eventually ease out (and) many businesses will look to restart in these flexible workspaces. Co-working spaces are not only the most cost effective, but also offer flexibility in terms of time period of rental agreements. Co-working spaces can be rented on monthly, day-to-day and even hourly basis.”

On conventional offices, Limaye said, “Traditional office spaces are currently a source of worry for both tenants and landlords. This is because it is difficult to visualise and plan for a post-pandemic market scenario. However, when the government’s focus shifts back to economic growth, it will roll out business-boosting incentives that will revive the fortunes of commercial office spaces quickly.”

COMMENT NOW