Office space absorption to touch 53-57 mn sq ft by 2022-end: Report

The adoption of activity-based working, hotdesking and targeted mobility has gained momentum post pandemic. As a result, office space absorption is expected to touch 53-57 million sq. ft. by the end of 2022. Moreover, flexible space stock in India is also estimated to cross 80 million sq. ft. by the end of 2025, CBRE-CII report said.

Second quarter of 2022 witnessed record leasing activity as space take-up grew by 220% year on year (YoY) to 18.2 million sq. ft. In the first half (H1) of  2022, 29.5 million sq. ft. of leasing activity was recorded registering a growth up by 157% YoY. The report said that the supply addition increased by 26% YoY and crossed 26 million sq. ft. by the  end of first half.Tech firms accounted for 30% of the space take-up in H1 2022 followed by other sectors on an annual basis, it added.

According to the CBRE research, Q3 2022, 73% of workplaces allow for hybrid working, 18% allow for office only and 6% for remote only. It finds that in H1 2022, flexible space operators accounted for over 6 million sq. ft. of office leasing activity in India but is estimated to cross 80 million sq. ft. by the end of 2025 as product innovation and customised offerings by them is growing due to changed behaviours of workforce which would never return to pre-pandemic norms.

Mr. Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE, said, “The real estate sector in India performed well in H1 2022 amid the evolving market dynamics,hybrid working remains the most favoured workplace policy but the impact of the recession in the US and some European nations could be felt in the Indian office market as well.” We estimate alternative segments such as flexible space will pave the way for innovative new age Real Estate solutions and supplement economic growth, he added.

He also said that across major cities, micro-markets witnessed a rental growth of 1-5% and in select locations, rent rose by up to 6-9% in the first two quarters of 2022.  

Pent-up demand and continued strength of e-commerce led to the  robust recovery of real estate retail. Leasing activity in retail touched 1.54 million sq. ft. in H1 2022, a 166% growth YoY. Tier II, III and now even Tier IV locations are gaining traction as developers and retailers look to leverage the spending power of these regions, CBRE said in its report.

65% of the retailers intend to open more stores in 2022 while 50% prefer better locations in high streets and prime malls, finds the CBRE’s Asia Pacific Retail survey in 2021,

While speaking at CII Realty 2022 conference, Thirumal Govindraj, senior managing director, RMZ said, “ Hub & Spoke model would not work anymore, Flex is not just taking up short term spaces and clients do not want to spend their CapEx.” Retail will take time to be back on high streets especially in Tier 2 and 3 cities, he added.