According to Colliers India and FICCI, the leasing of office space across six major cities could drop by 25–30% this year to 35–38 million square feet due to weak demand. A research titled “Emerging Trends and Opportunities in Office Sector – 2023” was published by real estate firm Colliers India and trade association FICCI. On account of increased demand, gross office space lease increased to 50.3 million square feet across six locations in 2022 from 32.9 million square feet in 2021.
Delhi-NCR, Mumbai, Bangalore, Hyderabad, Chennai, and Pune are the six cities mentioned. According to the analysis, an optimistic scenario would result in 35–38 million square feet of gross leasing in the office sector in India by 2023. The expert anticipates that the economic difficulties will subside and have little impact on occupiers’ confidence in general.
With corporates likely to finalise lease choices that had been temporarily placed on hold, it anticipates a big increase in leasing in the second half of this year. The Colliers-FICCI research, on the other hand, made note of the fact that in a gloomy scenario, the impact of economic headwinds would be sustained, delaying a rebound in demand. According to Colliers’ bullish forecast, leasing will reach 30-33 million square feet at a gross level by 2023.
The report suggested that while the office market in 2023 looks uncertain currently, it might bounce back with relative ease despite the global headwinds and other externalities. Leasing activity is likely to pick up in the second half of the year, led by global capability centres, BFSI companies and startups with sound business models, the report said. “The growth in traditional and flex spaces has been robust in 2022 as occupiers were more upbeat about leasing space and expanding their footprint.
In 2023, despite the office market being riddled with uncertainty, the office sector is poised for growth, provided the economic environment remains bright,” Peush Jain, Managing Director (Office Services) at Colliers India, said. “We do not expect the leasing numbers to fall below the peak pandemic levels of leasing even in a pessimistic scenario,” Jain said.
The key fundamentals of the office market will follow the trajectory of demand and supply to maintain a balance in the market, he added. During 2023, the report said that a relative slowdown is expected in overall traction especially from the tech sector due to the ongoing layoffs triggered by slower external demand. However, leasing by flex, engineering and BFSI companies are expected to remain resilient, it added.
“Hybrid working has been a game-changer in the future of work. To accommodate employees’ changing needs, occupiers are likely to switch gears towards adoption of hybrid model. This would benefit companies through optimal space utilisation,” Vimal Nadar, Senior Director and Head of Research at Colliers India, said.