Indian office sector might lease 35-38 mn square feet: Colliers

In ideal scenario, India's office market is predicted to have 35–38 million square feet of gross lease in 2023. In this scenario, it is anticipated that ecomic challenges would abate by Q2 2022 and have little impact on occupiers' overall confidence. As a result, bigger occupiers will finalise temporary lease choices, which will result in a major rise in take-up. On or hand, a pessimistic scenario would see ecomic headwinds last longer and postpone a demand rebound. Colliers projects that 2023 leasing will total around 30-33 million square feet at a gross level. According to analysis, despite current indications of uncertainty in office market for 2023 and or external factors, it may easily recover. second half of year is expected to see an increase in leasing activity, driven by global capability centres, BFSI businesses, and start-ups with strong business models.

latest report by Colliers, in collaboration with FICCI, highlights how, hybrid working is likely to optimize utilization and will continue to influence physical work infrastructure and how we work. Furr, flex s will continue to be a major focal point for landlords and occupiers.

“ growth in traditional and flex s has been robust in 2022 as occupiers were more upbeat about leasing and expanding ir footprint. In 2023, despite office market being riddled with uncertainty, office sector is poised for growth, provided ecomic environment remains bright. We do t expect leasing numbers to fall below peak pandemic levels of leasing even in a pessimistic scenario.  key fundamentals of office market will follow trajectory of demand and supply to maintain a balance in market,” said Peush Jain, Managing Director, Office Services at Colliers India.

Hybrid working is optimising office utilisation

Led by various employee-centric and operational benefits, occupiers are embracing hybrid working model. According to a Colliers poll of occupiers on hybrid working in September 2022, 63% of occupiers are adopting concept, and this number is only likely to rise. Following pandemic, office use is shifting as occupants put more of an emphasis on de-densifying areas. People are moving towards hybrid work, making offices more efficient, and improving ir ability to facilitate cooperation. Due to employee preferences for working from places closer to ir homes, occupiers are also considering dividing office s across company centres.

​Amidst fast-shifting market dynamics, flex s to remain upbeat

Flex s, which are a "one-stop solution" for occupiers, are being used by offices to seamlessly integrate hybrid modes of working as y have grown more robust. Flex operators in India leased 7 million square feet of Grade A office in 2022, a rise of more than three times previous levels. Although tech industry is still in flux, occupiers are neverless inclined to lease flexible s because of flexible leasing arrangements and short lease periods provided by flex players, which reduces ir capital outlay.

How will office sector perform during 2023?

Due to continuous layoffs brought on by reduced external demand, a significant reduction in overall traction, tably from IT industry, is anticipated in 2023. neless, businesses in BFSI sector, engineering, and leasing via flex are anticipated to be robust. It will take time to determine if office market can overcome recessionary fears and establish itself in second half of 2023 or if ecomic downturn will have a lasting effect. market, however, is resilient eugh to recover, just as it did during epidemic.

"Hybrid working has fundamentally altered nature of work in future. Occupiers are expected to shift ir focus towards adopting a hybrid strategy to satisfy employees' evolving requirements. Businesses would profit from best possible use. In order to move workplaces closer to employees' homes, occupiers are also likely to divide ir huge offices into satellite offices. Flex demand is probably going to increase as a result. Hybrid working is expected to change important office foundations in next years, and it will be especially important for expansion of flexible s, according to Vimal Nadar, Senior Director and Head of Research at Colliers India.