Workplaces To Undergo Significant Changes: Colliers
During Q1 2021, total Grade A gross absorption for the top six Indian cities was 4.3 million square feet (396,000 square meters), a decline of 49.8% YoY, as per the latest Colliers-FICCI report titled ‘The Future Workplace: Resolving Uncertainty- Charting the Future of Offices in India’. Colliers forecasts 2021 total net absorption to be around 20 million square feet, in line with that of 2020 as occupiers continue to focus on their CRE portfolio optimization. On the supply front, Colliers recorded 6.9 million square feet (644,000 square meters) of new commercial offices in Q1 2021, a decline of 48.1% YOY. Colliers believes that demand in 2021 will be driven by mainly technology (IT-BPM), and engineering & manufacturing sectors. The net office absorption in 2020 across the top six Indian was 20.6 million square feet (1.9 million square meters), a decline of 42.8% YoY. Technology firms remained the major demand drivers, with about 45% of the demand from large occupiers in recently completed projects offering better wellness and hygiene standards. "We believe demand in 2021 to be driven by mainly technology (IT-BPM), and engineering & manufacturing sectors. With demand likely to increase substantially for services in artificial intelligence, machine learning and robotics, we believe that technology companies will expand their office portfolio over the next three years as Indian talent is being considered favourably for high-end R&D activities”, said Arpit Mehrotra, Managing Director, Office Services (South India) at Colliers. As of the end of February 2021, the total flexible workspace stock stood at 30 million square feet (2.8 million square meters), across the top six Indian cities out of which Bengaluru, Hyderabad and Mumbai accounted for the bulk. During 2021, Colliers forecasts that flexible workspace operators will lease around 3 million square feet (279,000 square meters), similar to 2020. However, in 2022, they expect a pick-up in demand for well-located, high quality and efficient flexible workspaces, resulting in their occupying 5.4% of the total commercial office portfolio in India. During 2020, institutional investments worth INR35,835 crores (USD4.8 billion) were recorded despite a muted activity during Q2 2020. Investors continue to be bullish on the Indian real estate sector and asset classes such as offices, data centres and warehouses are receiving increasing interest. During 2020, 46% of the total inflows accounting to INR15,450 crores (USD2.2 billion) were in the office market, signifying investors’ unwavering confidence in the commercial office asset class despite India’s continuing work from home scenario. Between 2018 and 2020, commercial office assets accounted for over 55% of the total investments in Indian real estate, showing the high appetite of investors. The top six Indian cities saw an average annual supply of over 35 million square feet (3.3 million square meters) between 2018 and 2020 with the majority being snapped up by institutional investors. At Colliers, we feel that the pandemic is reshaping the workplace, with occupiers reimagining the future of work. Over the next five years, we expect workplaces to revolve around the following three themes as enterprises strive to maintain a corporate culture that attracts and retains top talent. Place: We believe that portfolio optimization will likely be the over-arching theme in 2021 and 2022 as occupiers explore strategies to optimise an efficient corporate real estate portfolio that looks at having multiple offices closer to the employees residences rather than consolidating in distant locations. Space: Occupiers are likely to transition from fixed space in workplaces to evolving spaces, according to the needs of the enterprise at different times with a focus on health and wellness of their employees. Pace: Occupiers are accelerating technology adoption in the workplace to make better collaboration and efficiency possible, as well as boost overall productivity and pace of work. Environmental sustainability and reducing carbon footprint will also drive occupiers’ choice of offices. “The future workplace is going to be the catalyst for growth & innovation. The functionality of workplace is going to shift from “place of work” to “place where people meet, and ideas generate”. It is the collaboration of design and technology which will drive the future workplace, said Ashish Puri, Director, Interior Design Services (India), at Colliers. While sustainability has always been an agenda driven by climate change, investments in Environmental, Social and Governance (ESG) have gained momentum in the past few years. Colliers recommends green technologies that can be used in commercial office buildings by developers and occupiers. Siddhart Goel, Senior Director & Head, Research at Colliers India, further added, “As India enters the second wave of the pandemic in India, Colliers’ survey shows that two main aspects respondents miss as they work remotely is their relationship with colleagues in office, and the separation of home and office dimensions. We believe that the workplace while essential, is likely to significantly shift over the next five years. Offices are likely to become places for collaboration, rather than simply workspaces, with most occupiers choosing a hybrid model of working where employees go to the office only a few days a week. Over the next two years, health and wellness are likely to become even more significant factors while choosing offices, with blue-chip companies giving preference to developments that promote wellness.”
Tags : Press Room Workspace Lease Office Demand Colliers Flexible workspace operators