After the epidemic, it was widely expected that co-workers would soon be issued a death certificate. However, like many others, this prediction was unfounded – the emergence of co-workers as one of the best options for adopting a hybrid model in the ‘new normal’ office.
The latest ANAROCK study reveals that of the total 34.1 million square feet of net exploitation in the top 7 cities in FY 2021-22, co-working constitutes a 13% share (approximately 4.43 million square feet). In FY 2020-21, its share was only 5% of the net exploitation of 21.32 million square feet – an 8% increase in its total share. This is the highest growth rate among all office departments.
At about 4%, manufacturing / industrial sectors recorded the second highest YoY growth in net office exploitation in FY22. Shares of IT / ITeS and ecommerce sector fell 8% and 6%, respectively, compared to FY21.
Anuj Puri, Chairman – ANAROCK Group, said, “The hybrid work model emerged as a powerful new force in the Indian office real estate market during the epidemic. There has been a gradual but significant shift to flexible spaces, which has given businesses and employees a sense of urgency to continue working smoothly. Co-workplaces have become the preferred choice for adopting hybrid work models, compared to other options for changing office layouts or hub-and-spoke models. “
Large transactions (> 0.1 million sq ft) accounted for about 50% of overall office transaction activity in the top 7 cities in FY22, up from 47% in FY21. Medium-sized occupants also saw a marginal increase of 1% of total office leases in FY22, and small deals fell 4% annually.
“Medium and large deals were prominent in the current financial year as occupants were optimizing their portfolios,” Puri said. “New realities include bringing workers back to work, increasing the valuation of new leases and improving employment conditions.”
Completion – Top 7 cities witnessed strong new office supply in FY22, which is 51.2 million square feet. This is an increase of 27% over FY21. The cities south of Bangalore, Hyderabad and Chennai dominated the new finish with a total share of 58% (approximately 29.85 million sq ft).
Rent – Average. Office rent in the top 7 cities stands at INR 76 / sf / Mo MMR continues to be the most expensive office market with INR 126 / sf / Mo rental, followed by Bangalore and NCR each at INR 78 / sf / Mo.
Vacancies – High in terms of new completion, average. Vacancy levels in the top 7 cities increased by 1% – from 15% in FY21 to 16% in FY22.
At 28.5%, NCR has the highest number of office vacancies among the top 7 cities, followed by Kolkata and MMR at 23.5% and 15.75% respectively.
Pune is the only city where the office space vacancy rate is 8.5% in single digits.