The hybrid work paradigm drives up the demand for office space
Instead of being “wiped out” as the epidemic forecasts were about cooperating areas, their percentage inside the office space leases has, in reality, drastically increased because of hybrid work forms. According to a report by real estate analysts at Anarock, cooperative regions had an eight percent growth year-over-year (YoY) as a result of businesses going “lower back to work.” Thirteen percent, or around 4.43 million square feet, of the overall 34.1 million square feet of office space that has been leased this year has been occupied by co-operating spaces.
The increase is a significant eight percentage points over the FY 20-21 share of just five percentage points of the internet absorptions of 21.32 million square feet. Additionally, this represents the biggest “category” increase in terms of office space absorption. On a YoY basis, the manufacturing and commercial sectors increased by four percentage points, while the IT and ITeS sectors had declines of eight percentage points and six percentage points, respectively, during the same period.
Chairman of Anarock, Anuj Puri, explained the trend as follows: “During the epidemic, the hybrid work version became a significant new force on the Indian office real estate market. The change to flexible zones, which provide staff members and organizations the elasticity to maintain operations smoothly, became slow but significant. Compared to the other options of changing office layouts or the hub-and-spoke model, cooperating areas have become the most sought choice to implement the hybrid work model.”
Similar findings were made by Anarock data, which showed that in FY22, over 50% of all office transactions in the Top 7 Cities were “giant bids,” defined as those larger than 0.1 million square feet, up from 47% in FY21. Smaller offers had an annual decline of four percentage points, but mid-sized occupiers also saw a little increase of one percentage point in overall office leases in FY22.
As occupiers optimize their portfolios, “mid and major offers have been distinguished within the current financial year,” according to Puri. “The new realities” include getting employees back to their desks, giving recent renters a higher score, and improving the hiring process.
The delivery aspect also experienced growth. A 27 percent increase over FY21 was seen in new deliveries in FY22, totaling 51.2 million square feet across the top seven towns. Bengaluru, Hyderabad, and Chennai, three southern cities, dominated new construction, accounting for 58% of the square footage completed.
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