Mumbai: Demand for office space soars in 2022, likely to dip in 2023

Mumbai: After two years of slow demand for commercial offices, the year 2022 is likely to close on a high in India, with gross absorption expected to touch 50mn sq ft, as per Colliers. Another real estate consultancy, JLL India, puts the figure of net absorption for office space by 2022-end at 39mn sq ft.

However, in 2023, the demand for commercial spaces is expected to take a hit.

“The year 2022 is likely to be a landmark year in commercial office real estate. Collaborating, brainstorming and creating a dynamic culture are the three pillars of any workplace post-pandemic. During 2023, slow decision-making could result in leasing activity of about 35-38mn sq ft. In 2023, Bengaluru followed by Hyderabad are expected to see the most of the new supply across the top six cities,” said Ramesh Nair, CEO (India) and MD – Market Development (Asia), Colliers.

This point of view for 2023 is disagreed by JLL India, who is of the view that there will be a marginal year-on-year rise at net absorption expected to be at around 40 mn sq ft.

Colliers data shows that in 2022, there is a 52% rise in total leasing as compared to last year with Bengaluru accounting for about 33% of the gross absorption, followed by Delhi-NCR and Hyderabad.

JLL India’s data also suggests a similar trend and percentage rise in the net absorption for office space year-on-year in 2022.

While demand in Bengaluru, Delhi-NCR and Chennai has already surpassed the earlier high seen in 2019, Mumbai, Hyderabad and Pune are also inching towards reaching historical levels by year-end. Collier has seen a slight dent in enquiries and demand in the near term amidst global economic headwinds. Provided the demand remains stable and consistent in the first half of 2023, rentals are likely to pick up from the second half of the year.

Likewise, JLL India too has seen a slight decline in space take-up by tech firms.

Flex operators or co-working spaces continue to pick up more space than ever before with them likely to lease 7mn sq feet by the end of 2022.