The demand for office space took a serious hit in March 2020 following the coronavirus pandemic. The increasing trend of working from home has prompted occupants of office space, especially in Grade A properties, to delay renewal of lease agreements, thus weighing down on rentals.
However, a new study by investment management company Colliers and real estate agency CBRE Matrix shows that startups are expected to lease around 29 million sq ft between 2022 and 2024, which is 1.3 times more than the period of 2019-2021. Is. Their share in office leasing is projected to increase from just 2% in 2010 to 13% by 2024.
Given the digital adoption and e-commerce boom in a post COVID world, fintech and logistics startups are seen as demand drivers for office space. The study shows that Bengaluru continues to be the top startup hub with 34% leasing share during 2019-21, followed by Delhi-NCR. Delhi-NCR witnessed a three-fold growth in leasing by startups during 2021 on a year-on-year basis. While Mumbai has seen some pick-up in this segment, the relatively high fares see a bottleneck in the initial phase of operations for companies.
Meanwhile, IT companies continue to account for the bulk of office leasing, though their contribution has dwindled in the recent quarter. An analysis of the commercial realty sector by property consultant Knight Frank India showed that the share of the IT industry declined to 27% in the second half of calendar year 2021 (H22021) from 41% in the same period last year. Nevertheless, the IT sector is witnessing strong demand and with many leading Indian IT companies already opting for back-to-work themes, experts say the demand for office space will gradually improve.
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