Flex leasing will reach 7 million square meters by the end of 2022 due to increasing demand for office space, says Colliers

• Demand for office space is expected to increase by 52% in 2022 compared to 2021.
  
• In fact, demand for office space in Bengaluru, Delhi-NCR and Chennai in 2022 has already surpassed 2019 levels.
  
• According to the report, flex operators are likely to rent 7 million square feet by the end of 2022, the highest level ever seen in the country after 2019.

With most businesses working from home during the Covid-19 pandemic, demand for commercial office space has declined over the past two years. However, with more and more offices adopting a hybrid work mode and asking employees to return to the office, demand for office space increased in 2022. According to a report by necklacesa professional services and wealth management company.

This demand is also likely to increase by 52% this year compared to the previous year. Occupiers are optimistic about their future workplace needs after a two-year hiatus and were snapping up office space in India’s largest cities, the report said.

Flex space sees an upward trend

The report predicts flex operators are likely to rent 7 million square feet by the end of 2022, which will be the highest number ever in the country after 2019.

“This is double compared to 2021, as the demand for flex space is huge this year among medium and large companies. Residents approaching the end of their tenancy are exploring flex spaces as their relocation option because of the flexibility it offers them,” the report said.

So says Vimal Nadar, senior director and head of research at Colliers India, new flex space offerings are expected to increase by approximately 25%-30% YoY in 2022, to approximately 44 million square feet. In 2023, however, developers will likely proceed with caution.

“Developers will likely match the new supply with demand momentum. This will ensure that the market equilibrium is not disrupted and that vacancy levels are limited,” said Nadar.

The demand for office space is already exceeding the level of 2019

According to the report, Bengaluru will account for at least 33% of the gross take-up of office space. This is likely to be followed by Delhi-NCR and Hyderabad among other cities in India.

“The year 2022 is likely to be a milestone in the commercial office property. Collaborating, brainstorming and creating a dynamic culture are the three pillars of any post-pandemic workplace,” says Ramesh NairCEO, India and Managing Director, Market Development, Asia, Colliers.

Nair went on to say that slow decision-making could lead to rental activity of about 35-38 million square feet next year. In 2023, Bengaluru, followed by Hyderabad, is expected to see the bulk of new supply in the top six cities.

Demand for office space in 2022 has already surpassed 2019 levels in Bengaluru, Delhi-NCR and Chennai. According to the report, Pune is also expected to experience similar traction by the end of this year.

“We are seeing a slight decline in applications and demand in the near term amid global economic headwinds. Provided demand remains stable and consistent through the first half of 2023, rents are likely to pick up from the second half of the year,” Nair added.

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