2020 Commercial Office Gross Absorption Down 41% at 34 Million Square Feet; Supply Down by only 2% at 38.1 Million Square Feet: Colliers Research

GURUGRAM, India , Jan. 4, 2021 /PRNewswire/ -- The year 2020 witnessed commercial office gross absorption of about 34 million square feet across the top six1 cities in India , a fall of about 41% from 2019, which saw demand at an all-time high. The gross absorption during the year that was marked by the pandemic was at a six-year low. However, demand picked up during the second half of the year as occupiers gained confidence to finalize deals that were stalled during the year and started planning for returning to 'business as normal scenario'. Gross absorption during the second half of the year rose 25% over the first half of 2020.

Bengaluru accounted for 33% of the gross absorption at about 11.2 million square feet. This was followed by Hyderabad and Delhi NCR with a share of 18% and 17%, respectively. On the supply front, 2020 saw about 38.1 million sq. feet of supply infusion, a decline of only 2% from 2019, despite a nation-wide lockdown in Q2 2020 hampering construction schedules.

City	2019 Gross Absorption (million sq. feet)	2020 Gross Absorption (million sq. feet)	% Change
Bengaluru	15.0	11.2	-25%
Chennai	6.1	4.2	-30%
Delhi-NCR	9.5	5.9	-38%
Hyderabad	9.5	6.0	-37%
Mumbai	9.4	3.6	-62%
Pune	7.8	3.1	-60%
Total	57.3	34.1	-40%
Note: Gross absorption does not include lease renewals, pre-commitments/LOIs
Source: Colliers International Research

Southern Cities Remain Most Resilient; Bengaluru, Hyderabad Demand See Upside From Prior Pre-commitments

The southern cities accounted for 63% of the total gross absorption during the year. Bengaluru not only led leasing activity in the country, but also witnessed the least disruption to demand in 2020 from the pandemic. The city witnessed gross absorption of about 11.2 million sq. feet, a drop of 25% from 2019 levels. Chennai and Hyderabad witnessed lower absorption of 30% and 37% respectively, from 2019 levels. Leasing activity in Bengaluru and Hyderabad was led by the completion of buildings that had prior pre-commitments.

"While the pandemic did lead to a temporary challenge, Southern cities weathered the storm and proved to be most resilient. Bengaluru, not only led the office absorption in India but due to pre-commitments and enquiries in from Q3, 2020 onwards is expected to bounce back in 2021," said Arpit Mehrotra , Managing Director, Office Services (South India ) at Colliers India .

During the year, cities such as Bengaluru and Hyderabad continued to witness stable rentals and did not see a drop in quoted rentals by developers led by sustained queries for space in the second half of the year. Bengaluru and Hyderabad have been witnessing pre-commitments and enquiries from Q3 2020, signaling a revival in demand for office space from occupiers.

"The commercial office market has started improving since Q3 2020, and we expect the market to recover post June 2021 . We believe that demand for office space will be run by technology companies, especially for their global in-house centers. Suburban and peripheral office locations will continue to garner traction, and occupiers will look to adopt a hub and spoke model for ease of employees. While rentals have dropped in cities like Delhi-NCR and Mumbai , cities like Bengaluru, Hyderabad and Pune continue to be resilient," says Siddhart Goel , Senior Director & Head of Research, Colliers India.

Western Cities Record Sharpest Drop

Mumbai and Pune saw their demand more than halve this year as they recorded a drop of 62% and 60% respectively in their gross absorption this year. This was because the state of Maharashtra saw one of the longest and toughest lockdowns owing to the pandemic, which affected both demand and supply of commercial offices. Firstly, as employees have operated from home most of this year, their employers are using this period to assess their office needs and strategize for the future. Secondly, supply has also been relatively low and given that vacancy rates in Mumbai (13.5%) and Pune (9.5%) are low, there was not much vacant space to transact this year.

"The commercial office market in Mumbai is showing resilience, owners of commercial real estate have lowered their return expectations, which is a good sign. Investors should keep their return expectations reasonable for a sustainable growth. Recovery to the pre-COVID levels will depend on stable government policies, at both state and central level and incentivising corporates to grow and hire," said Sangram Tanwar , Managing Director, Office Services (Mumbai ) at Colliers India .

Animesh Tripathi , Senior Director, Office Services (Pune ) at Colliers India added, "The impact of the current adversities on the commercial office sector doesn't seem very significant when compared with the decadal average of absorption i.e., 4.5 million sq. feet per year. The leasing activities in 2021 is expected to be majorly driven by sectors like Information Technology followed by Healthcare & E-commerce."

Outlook for 2021

"Our research suggests that this year we can expect leasing activity to pick up further by 25-30% to around 42-45 million sq. feet. Bengaluru, Hyderabad and NCR are going to continue to drive the leasing amongst the top 6 Indian cities. Tech companies involved in fintech, healthcare, e-commerce, and entertainment (OTP and gaming), amongst others may be significant demand drivers even as IT-BPO companies, followed by BFSI companies will remain the main occupiers as has been the trend over the last decade," said Siddhart Goel , Senior Director & Head of Research, Colliers India .

According to Bhupindra Singh, Managing Director, Regional Tenant Representation (India ) & Office Services (North India ) at Colliers International , "Given the impact on their business, occupiers today are averse to making heavy capex investments in their real estate operations. Hence, we have been seeing most of our clients, Indian as well as MNCs, looking at options for leasing managed offices that provide them with the best layouts, fit outs and services to support their business activities. Even as confidence in India's economic recovery is increasing every day, the need of the hour is for developers/landlords and flexible space operators to provide innovative business solutions that provide even greater flexibility to their clients to help them tackle the uncertain conditions that are expected to remain until the second half of 2021."

1 Bengaluru, Chennai , Delhi-NCR (Delhi , Gurugram, Noida-Greater Noida), Hyderabad , Mumbai (Mumbai , Navi Mumbai, Thane), Pune

About Colliers International Group Inc.:

Colliers International (NASDAQ: CIGI) (TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 68 countries, our more than 15,000 enterprising professionals work collaboratively to provide expert advice to maximize the value of property for real estate occupiers, owners and investors. For more than 25 years, our experienced leadership, owning approximately 40% of our equity, has delivered compound annual investment returns of almost 20% for shareholders. In 2019, corporate revenues were more than $3.0 billion ($3.5 billion including affiliates), with $33 billion of assets under management in our investment management segment. Learn more about how we accelerate success at corporate.colliers.com , Twitter @Colliers or LinkedIn .

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How coworking spaces will fight with COVID-19 pandemic?

The coronavirus pandemic has perturbed the business cycle globally leading to a slowdown. Maybe this is the most important issue for startups, entrepreneurs and most likely small and medium-sized enterprises to come, as most of them are heavily affected and barely survive the pandemic diseases.

Following the implementation by the respective countries and governments of the movement restriction order or circuit breaker, any form of mass gathering, or in this case – gathering to work is strictly prohibited. As a result, there are now "virtually empty" Coworking space and it could last for months.

So, Will Coworking Spaces survive the COVID-19 pandemic? And the answer is yes, here's why.

Coworking spaces will help in cost saving

Best Coworking space in Jaipur are generally recognized predominantly by businesses, businessmen, and remote employees. As the pandemic goes, it affects most small and medium-sized enterprises ( SMEs) and maybe joining the cause. Coworking spaces in Jaipur and co-sharing offices can help these small and medium-sized enterprises continue to operate with a designated place of work. Though coworking spaces in Jaipur, small and medium-sized businesses may achieve cost savings by using funds in other needed departments rather than renting a whole office.

Remote Workers Have to Work Somewhere 

Now, for the first time, many people are just getting comfortable with work from home and figuring out all kinds of ways to make it smooth. That may mean that more workers and employers are at peace with it. But Not all remote employees have access to the facilities from home that they need to operate productively. After a couple of months of lockdown and working at home, millions of people will be willing to work from somewhere else, making coworking spaces in Jaipur appealing in this crisis.

Creating Community and network

As the pandemic goes on, because of companies unable to support the cause, more and more people will be unemployed. In the time of need, however, coworking places exist by creating more job opportunities for them to fill the offices.

With the economic downturn hitting the small and medium-sized businesses, they would need social networks and local links to regain their footing. Best Coworking space in Jaipur provides a perfect community to help each other from a business perspective and hopefully, together they will be able to go through the hard times. Nonetheless, it may be one of the primary ingredients to bounce back from the crisis with the aid of coworking spaces in Jaipur by bringing these small businesses together within a group. 

Conclusion

Many businesses will now take the opportunity to reconsider their work arrangements and give their workers more flexibility than ever before, particularly given the benefits of efficiency and engagement, and that will drive the demand for co-working spaces in Jaipur upwards. As long as hygiene practices and health precautions are enforced, coworking spaces provide an alternative for companies in need of a replacement workspace that may prove useful.

 

Companies will also put greater focus on cost management once the lockdown time is over and prefer versatile workspaces. Most corporations would avoid capital expenditures and look to their colleagues to expand their business. The co-working industry is also likely to see some consolidation soon and companies will seek options for acquisition. The current scenario will also see larger corporations searching for smaller spaces in the immediate future to maintain synergized business continuity.

WeWork Launches India Operations With Its 1st Collaborative Work Space in Bengaluru

WeWork, a New York-based collaborative workspace and the 9th highest-valued start-up in the world, opened its doors with its first community workspace in India - “WeWork Galaxy”, in Bengaluru.” WeWork also targets two new centers’ in Koramangala and Whitefield respectively. The Bangalore launch also coincides with the opening of first location in Brazil (Sao Palo).

“WeWork Galaxy”, located in Residency Road, Bengaluru is well equipped to cater to 2200 members, powered by beautiful, functional work spaces, swimming pool and gym. The company is aiming to reach out to entrepreneurs, freelancers, SMEs & SMBs, start-ups across e-commerce, IT/ITES, retail, FMCG, healthcare, legal, and marketing segments amongst others. WeWork also caters to large corporates seeing to take advantage of its flexible offering and innovative atmosphere. WeWork(India) is also supporting Meghshala, an NGO that empowers teachers, the cloud-based way by offering special discounted rates.

WeWork was founded in 2010 to help create a world where people work to make a life, not just a living. There has been a macro shift toward a new way of work—one focused on a movement towards meaning—and WeWork is accelerating this movement. We have seen that more than 70% of WeWork’s members collaborate and more than 50% do business together.

Commenting on the launch, Karan Virwani, Director - WeWork (India) said, “We are excited to officially kick start our operations in India with the launch of ‘WeWork Galaxy’ in Bangalore. WeWork is a global company with a local playbook and the reason we chose Bengaluru as our first location is because it’s demographically the most diverse city with the second fastest-growing major metropolis in India having a very robust startup ecosystem.”

Ole Ruch, Managing Director, WeWork Asia-Pacific, added, “For WeWork, 2017 is a year of great expansion in the Asia-Pacific region, and we want to strengthen our communities here as we enter new markets. We’ll soon bring WeWork to Mumbai and Delhi as well, and are looking forward to seeing what innovative new ideas will come from these communities.”

‘WeWork Galaxy’ is located right in the heart of the city in Bangalore and its membership comes with internet access, cleaning and furniture. Members can choose from a variety of membership plans, which include hot desks, dedicated desks, Wi-Fi, housekeeping, private noise-controlled office, parking and a lot more. The building interior will be a mix of the global WeWork look and feel blended with a local touch of the Indian culture. Local Bangalorean street artists will adorn the walls of the location to give it a local authentic feel. WeWork wants to be wherever creators are.

Juggy Marwaha, Lead – WeWork India also mentioned that “Companies today are offering its employees the flexibility to work out of shared office spaces and execute projects which they are passionate about. With the launch of ‘WeWork Galaxy’, we intend to cater to the needs of this evolving segment and tap this new trend. At WeWork, we are creating beautiful, well designed and functional spaces that encourage collaboration.”

India is the fastest growing economy in the world with a young demographic. As India emerges as one of the biggest markets in the world, for tech based startups, work spaces are transforming from traditional and hierarchical to a relaxed and community focused setup. Whenever people are open to exchanging business ideas and open to new connections their businesses flourish and our buildings take on a flavor and feel that is unique to that place.

Each WeWork location in India will be overseen by a dedicated community team, who will interact with members, help manage the building and daily tasks, as well as organize events and programming that will encourage collaboration.

Last year in 2016, WeWork doubled its membership with over 80k members utilizing the space, community and services that it offers. It is excited to see companies like Microsoft, Bacardi, Samsung, and nearly 450 enterprise members embracing a new way of working across the world. WeWork which was founded in 2010, is adding approximately 10 to 15 locations per month, and today has 149 physical locations, offices in 188 locations, covering 45 cities across the world.