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Workplaces to undergo significant changes; demand for offices to remain strong

Demand in 2021 to be driven by mainly technology, and engineering & manufacturing sectors

Gurugram, 16 April 2021 – 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 optimisation.

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.

Flexible workspace operators to lease about 3 million square feet in 2021

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.

Rise in ESG investments
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.”

Media Contact:
Sukanya Dasgupta
Associate Director & Head, India Marketing & Communications
Sukanya.dasgupta@colliers.com
+91 9811867682/ 8826377335

About Colliers
Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 67 countries, our more than 15,000 enterprising professionals work collaboratively to provide expert advice to real estate occupiers, owners and investors. For more than 25 years, our experienced leadership with significant insider ownership has delivered compound annual investment returns of almost 20% for shareholders. With annualized revenues of $3.0 billion ($3.3 billion including affiliates) and $40 billion of assets under management, we maximize the potential of property and accelerate the success of our clients and our people. 

 

 



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Arpit Mehrotra

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With over 17+ years’ experience, Arpit is responsible for the overall  direction, strategy and growth of the firm. Arpit enjoys strong relationships with both private investors, Developers as well as local and global corporates and interacts regularly with key clients to uncover opportunities in the rapidly moving  market & other cities. 

His key responsibility is represents client interests by addressing all service related issues and assisting them counter strategic and operational challenges, plays a very crucial role in strategizing end-to-end real estate solutions for Key corporate occupiers and developers including advice on leasing, sale /purchase. Having in expertise in managing the lease negotiations, lease structuring & closure on their behalf.

He has expertise in planning, undertaking demand assessment studies and transactional services including marketing strategies based on technical real estate market analysis and has successfully managed leasing and sales assignments for leading corporations, including Nokia,Philips, Mitel, Mavenir Pega, Novartis, Amazon ,United Health Group, Oracle, Accenture, Cognizant Technology, HP, Tieto, Lenovo, NCR,  NTT Data, Motorola, Ernst & Young  to name a few.

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Ashish Puri

Director

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Ashish is an accomplished Architect with over 16 years of experience in designing & building Workplaces, Retail spaces, Institutional, mixed use & Hospitality projects. He has worked extensively on diverse portfolio & delivered world class spaces all across India & abroad. With keen interest in Workplace strategy, Ashish is an advocate for high-performance creative office spaces and sustainable designs. Post his graduation in Architecture from RVCE Bangalore, he has diligently pursued innovation, planning, strategy, balance & delivery in the Design practice. 

As Director of Interior Design Services,  Ashish leads the Colliers India ID portfolio,  working to enhance the design and delivery capabilities of the team, strengthening  growth and facilitating meaningful client relationships. His holistic and collaborative approach had led to successful project outcomes alongwith building trust with the users. Prior to Colliers, Ashish was leading Interior Design portfolio for Synergy Property Development Services, Bangalore

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