As work from home mandates are shelved and the Indian IT workforce makes its way back to physical workspaces, the office space market is in the midst of a stunning recovery.

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Analysts said the recovery in office markets is set to continue with a vast majority of this workforce expected to work in hybrid mode, which means substantial time spent at the office.

“In one of our surveys, 70 percent of employees are looking at some sort of remote work or hybrid work, which means 70 percent of a company’s employees will be back in the office either one day, three days or five days a week,” said Nitin Chandalia, MD and Partner at BCG India.

Not surprisingly, the pick-up in office space transactions is reflective of this migration back to office. According to Knight Frank, 25 million square feet have been leased between January and June this year, translating to a 107 percent jump, year-on-year. Bengaluru and NCR have led the way, accounting for 7.7 million square feet and 4.1 million square feet of these transactions, respectively.

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Rentals have also seen a significant uptick. In Bengaluru, office rentals have spiked by 13 percent year-on-year, while Pune and Hyderabad have seen an 8 and 3 percent rise in rentals, respectively. Experts said the findings are indicative of tenants wanting to strike deals before rates increase further.

“There is buoyancy in terms of leasing and booking spaces,” said Juggy Marwaha, CEO of Prestige Office Ventures. “Clients have started stating clearly that they need a space because they don’t want another spike in rentals and they want to lock in the space today before the markets bounce back,” Marwaha added.

A significant percentage of the return-to-work push is towards co-working. Data shows that co-working spaces accounted for 17 percent of all office-space transactions between January and June 2022, against just 10 percent last year. The transactions in the first six months of 2022 total to 4.3 million square feet. However, big-ticket occupiers are circumspect about leasing out co-working spaces.

“We have taken small spaces — like in Hyderabad, where we’ve taken 25 to 30 seats,” said Harita Gupta, APAC and China Head at Sutherland, “Is this going to be a scale model for me? Not right now. But if I need immediate spaces like small spaces up to a hundred seats, then co-working is an option,” Gupta added.

Metros aren’t the only cities witnessing a comeback in India’s commercial spaces. Tier-2 markets are also shining with companies opting for centres in Bhopal, Mohali, Coimbatore and Ahmedabad to set up satellite offices for employees who may have moved to these cities during the pandemic.

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First Published:Jul 18, 2022 9:10 PM IST