Real estate news I Covid hit office space demand in March quarter but robust IT hiring to come to rescue

Beth McCandry

Covid hit demand for office space in the March quarter but hired a solid IT attitude to save Rep’s image Photo Credit: PTI

Commercial real estate weathered the Covid-19 storm relatively well until the virus hit back with a vengeance in 2021. The rental of office space in all major metropolises declined in the fourth quarter of the 2021 financial year.

According to the real estate consultant JLL, the net rent of office space in seven major cities fell by 36% to 5.5 million m² between January and March. However, falling demand did not seem to have any impact on rents. According to the JLL report, net demand for office space in these cities declined from 8.6 million square feet in the year-ago quarter to 5.53 million square feet from January to March 2021, largely due to the slack in Mumbai, which remains strong Reboot affected is pandemic.

JLL India said Bengaluru, another company in India, also fell to 2.2 million square feet, down from 2.2 million square feet from 2.7 million square feet in the same period last year.

Demand in Chennai decreased from 0.9 million square feet to 0.4 million square feet and Delhi-NCR from 1.5 million square feet to 1.1 million square feet. Mumbai saw a sharp drop from 2.1 million square feet to 0.2 million square feet.

Hyderabad and Kolkata were outliers as both saw increases. Net rent for office space in Hyderabad increased to 1.1 million square feet for the quarter ended March 31 from 1.9 million in the year-ago quarter.

However, according to real estate consultant ANAROCK, this decline is temporarily due to longer working hours due to house norms and should improve due to recent hiring trends in IT / ITES companies.

Prashant Thakur, Director & Head – Research at ANAROCK Property Consultants, says: “The four largest Indian IT / ITeS companies alone – TCS, Infosys, HCL and Wipro – hired around 42,000 employees in the first nine months of the financial year 2021 and Cognizant Capgemini hired nearly 39,500 people in the 2020 calendar year, with mass hiring plans for 2021. They plan to add around 23,000 and 30,000 employees respectively in fiscal 2021 post-pandemic business. “

This bodes well for general demand for office space in 2022 and 2023, with the gradual return of normality coupled with the new workforce, Thakur adds.

The IT / ITeS sectors are among the main drivers of all leasing activities in the top cities. Bulky rentals through these firms will affect the demand for quality office space. Despite increased flexibility and planned working hours, companies need to take measures to consolidate to accommodate the new norms for social distancing and increased health measures. This is expected to increase space requirements per employee from 80 square feet in the pre-pandemic period to at least 120-130 square feet per employee after COVID-19, according to ANAROCK.

Many IT majors are now focused on getting at least a certain portion of the staff back into their offices. This is an indication of the inherent shortcomings in work-from-home options – data security concerns, employee burnout from working beyond normal working hours at home, diluted focus and motivation, and impaired team collaboration.

Facebook, Microsoft and Uber have made a strong statement that such a return migration is expected to begin in May 2021. While Google and Microsoft will prefer hybrid working models in the future, these companies also take health standards very seriously. Given that COVID-19 will not be eradicated for a long time (if at all), social distancing is becoming a more or less permanent trait in future workplaces.