In the Awfis Leadership Summit 2021, industry experts said that recent reports that predicted offices to grow by about 670 million in 2021 and according to the panelists, the number will go up to 750 million by 2022.
Co-working spaces are expected to see a rise in absorption of seats between 20-30%, according to industry experts. Seats absorption is about 15% of the total of office leasing by corporates in 2021 and the share is expected to increase further.
In the The AwFs Leadership Summit 2021, industry experts said that recent reports that predicted offices to grow by about 670 million in 2021 and according to the panelists, the number will go up to 750 million by 2022.
“With more than 75% of the workforce wanting to return to the office, we certainly feel that the commercial real estate business will see a steady increase in demand to 30-35 million sft per annum levels next two years,” said Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Ltd.
“We have noticed that companies are now focusing on adopting a flexible and dynamic work model; therefore, occupiers desire fexibility in contracts. With nearly 50% of Grade A office real estate now being institutional in terms of ownership, there is drive on asset enhancement with the intent to retain and improve overall customer experience and extract better economic value,” he added.
The demand for CRE is seeing an uptake especially from the IT sector since the cost of operating in India is lower compared to other markets as well as the large pool of talent the country has to offer. A strong penetration of flex office spaces will be seen in Tier II & III cities since organisations want to be closer to employees who have moved back to their hometowns in these cities.
“The ongoing pandemic has had an unprecedented impact across industries and real estate was no exception. However, one of the few resilient sectors in real estate that was able to sustain the disruption caused by the pandemic was the commercial real estate sector. Despite the pandemic’s impact on its operation, culture and the way in which the industry functions, the CRE sector was able to bounce back stronger than ever,” said Amit Ramani, CEO & Founder, AwFs and Vice President, Indian Workspace Association.
India has been on a digital transformation journey and is known as the outsourcing hub of the world. With that journey continuing to grow the industry will see hotelization of spaces by 2030, since flexibility is demanded by the new workforce.
“With respect to crucial learnings from the pandemic, the learnings occupiers derived from the crisis will be very different from an investor’s learning and similarly the lessons that the developers learnt will be something entirely different – the culmination of all these will make real estate a much more robust environment to work in. Going forward, product enhancement is something to watch out for as buildings will have to change in terms of the offering the client is looking for. Developers also need to step into the occupier’s shoes and understand what they want to deliver accordingly,” said Juggy Marwaha, CEO, Prestige Office Ventures.
In the coming years, with hotelization of spaces, residential segments, malls and offices will overlap with each other. Therefore, development companies will become service companies. There is an increased focus on development because of quality supply especially due to lease and up lease models.
“The commercial real estate sector was quick to embrace the evolving business landscape amid the pandemic. With the gradual lifting of lockdown restrictions and the government’s mass vaccinations drive – we can expect businesses to display an increased inclination towards co-working/flexible spaces to meet the evolving real estate requirements,” said Ram Chandnani, Managing Director Advisory & Transaction Services India, CBRE.
The commercial real estate market is predicted to grow from an investor perspective in multiple asset classes. Nearly 50% of the real estate is institutional in terms of ownership, so there is a lot of pressure from investor partner in terms of rental pressure and future retention.
A lot of demand for flex offices can be seen from start up businesses. Corporates are now looking at distributed models of working in tier II & III cities which will give rise to flex spaces.
“In response to COVID-19, commercial real estate stakeholders have adapted quickly on the physical and technology fronts, health and safety and cost controls. Despite the second wave, liquidity and investments are improving as we are witnessing a positive sentiment amongst investors as compared to last year, where they preferred a cautious approach,” said Ramesh Nair, CEO, India & Managing Director, Market Development, Asia at Colliers.
The commercial real estate market needs to see movement beyond renewals towards pre-commitments and built-to-suit office deals, which will create more optimism amongst occupiers.
“We also expect share of flexible workspaces in total demand to increase in the future. Over the next few quarters, we will see more occupiers incorporating best practices to improve and modernize the workplace in terms of refurbishment and design,” Nair said.
This story appeared in the September 01, 2021 issue of Economic Times and was originally published at: https://m.economictimes.com/industry/services/property-/-cstruction/share-of-co-working-in-office-space-leasing-to-increase-in-2022-experts/articleshow/85830813.cms