Top-5 IT firms to rent 12 mn sq ft office space on robust hiring: Report

Co-working spaces to see demand because the challenges of the pandemic continue with discovery of new variants such as Omicron

The top-5 information technology companies’ incremental demand for office spaces, based on strong hiring in the last eighteen months, would be nearly 11.67 million sq ft over the next one to two years, according to a report by realty consultant Knight Frank India.

In 2019, the IT sector accounted for a quarterly average of 7 million sq ft of office space consumption, while the average office space leased across all sectors was 15 million sq ft. The Covid pandemic and the subsequent lockdowns forced many companies to review their office space strategies.

Office space consumption by the IT sector fell considerably during the lockdown impacted quarters of Q2 and Q3 of FY2020, with total space leased amounting to 2 million sq ft during this six-month period. However, with a return of normalcy in Q4 2020, the space take-up by this sector again rose sharply to 8 million sq ft. During Q1 to Q3 of FY2021, the IT sector leased a total of 8 million sq ft.

Due to the pandemic, average transacted rents in Mumbai, the National Capital Region, Pune, Ahmedabad and Kolkata had declined over the past year and a half. With improvement in demand for office space in 2021, rents have stabilised and in Q3 2021, markets such as Bengaluru and NCR witnessed strength in rent levels, the report said.

“The commercial office space has been seeing a gradual movement upwards as more and more corporates are recalling their employees to office. Despite WFH continuing, companies have realised the drawbacks of this mode of working which include lower collaboration between teams, loss of work due to poor infrastructure,” said Shishir Baijal, Chairman and Managing Director at Knight Frank India said.

“However, because the challenges of the pandemic continue with discovery of new variants such as Omicron, occupiers are predisposed to maintaining flexibility in their usage of real estate. As a result of this, there has been a steady growth in co- working spaces that offer occupiers shorter and more flexible lease terms allowing them to remain nimble,” he added.