After two years of slow demand for commercial offices, the year 2022 is likely to close on a new historical high, with gross absorption likely to touch 50 mn sq feet, according to a report by Colliers, a leading diversified professional services and investment management company.
This is likely to represent a 52 per cent rise in total leasing from last year. Occupiers have been optimistic about their future workplace needs, after a gap of two years, and were snapping up office space across the top Indian cities.
Bengaluru is likely to account for about 33 per cent of the gross absorption, followed by Delhi-NCR and Hyderabad, according to a press statement issued here on Tuesday.
“The year 2022 is likely to be a landmark year in commercial office real estate. Collaborating, brainstorming and creating a dynamic culture are the three pillars of any workplace post-pandemic. During 2023, slow decision-making could result in leasing activity of about 35-38 mn sq feet. In 2023, Bengaluru followed by Hyderabad expected to see most of the new supply across the top six cities, says Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.
“Market fundamentals continue to remain strong and demand holding through 2022. At this time, real estate players should prioritize long-term stability and creating stronger portfolios, focusing on aspects such as ESG and zero-carbon strategy.
The future of real estate will require some recalibration from traditional practices to sustain and grow in this constantly evolving market”, added Peush Jain, Managing Director, Office Services, Colliers India.
Upgradation of offices will be at the forefront and a recurring theme. Landlords and occupiers are looking to upgrade offices to modernize them and make offices more sustainable. Across the top six cities, office stock of about 118 million sq feet holds potential for upgradation, accounting for 19% of the total office stock.
While demand in Bengaluru, Delhi-NCR and Chennai has already surpassed the earlier high seen in 2019, Mumbai, Hyderabad, and Pune are also inching towards reaching historical levels by the end of the year.
However, we see a slight dent in enquiries and demand in the near term amidst global economic headwinds. Provided the demand remains stable and consistent in the first half of 2023, rentals are likely to pick up from the second half of the year.