IT Companies Set to Drive Office Space Demand
The Indian office market is expected to witness a rebound driven by record hiring , expansion in the information technology and IT-enabled services sector and aggressive vaccination rates in the country.
Based on the hiring in the past 18 months, the top five IT companies’ incremental demand for office spaces is expected to be nearly 11.67 million sq ft over the next two years once the offices open with full capacity, mentioned Knight Frank.
India’s top five IT companies are reported to have hired approximately 260,000 new employees during the April 2020 to September 2021 period.
The rebound for office space demand by IT companies has been strong in 2021 as by the end of the third quarter, the IT sector had leased a total of 8 million sq ft. The steady space take-up by the IT sector is continuing as both global and domestic companies have picked up large office spaces in the past few months, signalling a comeback of leasing momentum, Knight Frank said.
“The gradual but steady growth rate indicates that the Indian economy is ‘on the path to recovery’,” said Niranjan Hiranandani, national vice chairman at NAREDCO and MD at Hiranandani Group. “The resumption of economic activities, fast paced vaccination drive, hiring spree in IT\ITes sector and renewed interest of global investors in Grade A commercial real estate asset implies optimistic growth offtake.”
According to him, the market is observing trends like consolidation, expansion with dispersed portfolio, and shared spaces that will boost the practice of hub and spoke models across the markets. The fresh hiring data accorded for the last 18 months has led to an incremental demand for office spaces with hybrid models adopted by sectors across the economy.
The rise in GDP growth will fuel the demand for commercial office space as various sectors will outperform once they start operating in full capacity, Hiranandani said.
The perceived decrease in the intensity of the pandemic.
“The inherent strength of the Indian economy remains strong, despite the last 20 months of Covidwave-led disruptions,” said Viral Desai, executive director-transactions at Knight Frank India. “India’s prowess as a leading IT/ITeS services provider has remained unchanged and, in many ways, augmented due to the increased importance of technology-based business continuity. The hiring numbers of the top IT companies is a strong indicator, which when put to ground, requires companies to expand their current workplace capacities in the short to medium term.”
He is of the view that while work-from-home (WFH) will continue to remain an alternative of business continuity for IT players, the merits of being in a workspace is undeniable. These aspects auger well and therefore the transaction activities for office spaces will pick pace in the new year.
According to a recent Nasscom-Indeed report, employees and employers are equally interested in returning to the workplace in a hybrid setup, with around 50% of the workforce likely to return to offices for up to three days a week by January. Nearly 60% of organisations are expected to reach readiness to re-open office spaces by January.
For companies, data security, stakeholder preferences, and employee vaccination status are likely to be the key determinants of which employees will return to the workplace first.
The office space demand estimate is arrived at by experts after factoring in the average attrition rate in the sector and a hybrid workspace model, both of which will be key considerations for planning future office space requirements.
Source - economictimes.indiatimes.com
