Office space leasing in 2021 may cross 31 mn sq ft-last 10 yr average
New Delhi: Contrary to general expectation, the net absorption of office space in 2021 is expected to be at par with the average of the last 10 years i.e. 30-31 million sq ft.
At present only a fraction of employees are coming to offices, the numbers are expected to improve once we have a vaccine. The future of co-working is looking robust, as average co-working space has doubled during 2020 compared to 2019.
Anuj Puri, Chairman, Anarock Property Consultants said: “I am pleasantly surprised by the absorption. Honestly, I didn’t think that this calendar year will be 50-60 per cent of 2019 absorption. In June, I would have said it would be between 16 to 19 million sq. ft, but now the net absorption is likely to be somewhere around 25 million sq. ft. It is surprising.”
Puri was speaking at a webinar organised by Workplace Trends India, which is founded by Tushar Mittal, who also heads interior design firm SKV.
After dip in net office absorption in Q2 2020, it started improving gradually. “In comparison to Q2, the absorption went up by 63 per cent, but if we were to compare Q3 of the last year, the absorption went down by nearly 47 per cent. So, last year in the first nine month we saw nearly 32 million sq. ft. of net absorption. This year, in the first 9-months, we have only seen 17 million sq. ft. Hence, we expect this year to end with around 25-27 million sq. ft absorption and in comparison to 46 million sq. ft. last year, this is still a drop of 42-45 per cent.”
“2019 was a very extraordinary year of 46 million sq. ft. It will be wrong to take that as a benchmark. We should take the average of the last 10-year as a benchmark, which is around 31 million sq. ft. and there is a very good chance that in 2021 we will cross that number. In 2019, it was 46, but a year before in 2018 it was around 36 million sq. ft.,” said Ramesh Nair, Country Head and CEO, JLL India.
While net office absorption has improved considerably, only a fraction of employees have returned to work place so far. The percentage is further low when it comes to IT parks. “Our research shows it is actually 8 per cent at large campuses. There are two main reasons for it. There are many companies which have gone ahead and announced remote working plans till March 31, 2021 and employees don’t need to come to office.
Secondly, employees themselves are not very confident given the public transport situation in the country. It is a gradual process. Occupiers are highlighting that things are improving but very gradually and WFH don’t work for everyone and people will slowly start coming back to office,” said Nair.
Puri echoes the thought. “We don’t think we are going to see people coming until the vaccine is there. It is 9-11 per cent at various office parks and companies are not pushing their employees. Whether WFH works or not is a question mark, but until the vaccine comes in, the percentage will continue to remain low. Many of the IT Parks are not opening up. Clearly corporations are not there to push the employees.”
Anshul Jain, MD-South East Asia and India, C&W, agree with his peers. “Yes, people are scared but there is also a clear distinction between personal and work. They are out in markets, going everywhere buying stuff, but when it is about coming to offices, they are not keen. It is because of corporate cultural issues – MNC work culture and for right reasons,” said Jain.