New Delhi: As demand gains momentum post the lifting of the lockdown restrictions, office space leasing increased around 80 per cent during the July-September period on a quarter-on-quarter basis, a Knight Frank report said Total office space leased out across the eight major cities during the third quarter of 2020 stood at 0.44 million square metres.
The total office transactions of the eight markets in Q3 2020 have improved and reached 33 per cent of the 2019 quarterly average level.
“Chennai, National Capital Region (NCR), and Mumbai recorded higher recovery in Q3 2020 with transactions reaching the level of 57 per cent, 43 per cent, and 42 per cent respectively of the quarterly average of the year 2019,” it said.
Further, new office completions during the same period, reported growth of 126 per cent to 0.33 million square metres, compared to Q2 2020.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said: “The commercial office asset class performance for the third quarter has been encouraging especially when benchmarked against the quarterly average of 2019 as office transactions were at a historic high in that year.”
He noted that at the beginning of the pandemic in India, businesses were compelled to move to work from home as a business continuity process method.
The uncertain business environment that followed the initial lockdown, further caused occupiers to assess their office space strategies leading many to postpone their office expansion plans till Q2 2020.
“However, with the unlocking in progress, going forward as India edges back economic recovery, the office market dynamics are also expected to improve.
The recent success of REITs can be understood as an indicator of long-term confidence of investors for office space,” Baijal said.
Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India is of the view that while ‘work from home’ as a concept has proved to be an effective business continuity measure occupiers are likely to look at office space usage more strategically.
“This will lead to further innovation to include aspects like social distancing, health benefits, sustainability as well as preparedness for future contingencies. We expect the momentum of the transaction to accelerate in the near future,” he said.
Commenting on the revival of demand in the office space segment, Krish Raveshia, CEO, Azlo Realty said: “We cannot dispute that the pandemic has led to disruption and led to a lot of changes in the real estate sector. Having said that, accelerated adoption of technology and artificial intelligence within the sector has played a role in the revamp.”