Mumbai: In 2023, flex, hybrid and green commercial spaces will be the underlying themes for the office sector, as per a recent industry report, led by tech companies. A flex space is any commercial real estate that offers a business space, usually a single-storey building, which can be used as a multi-purpose workspace to meet business needs.
The report, ‘Real Estate Outlook for 2023’, states that about 60 mn sq ft of additional green Grade A stock has received pre-certifications or are under discussion for green certification, which is likely to come in the office markets of Hyderabad, Pune and Delhi National Capital Region.
Global economy seeing signs of recession, could lead to slowdown
Chief Executive Officer (India) and Managing Director, Market Development (Asia), Ramesh Nair, said, “The real estate sector saw strong recovery gains and impressive growth in 2022, signalling the significance of office spaces in a post Covid-19 world. As we look at 2023, the global economy is seeing signs of recession, which could lead to a relative slowdown. However, the Asia Pacific region appears less volatile, with several pockets of opportunity on the horizon.”
He added, “We foresee some stability in the market by mid-year in the office markets. Hybrid working, flexibility and greening real estate will be the key buzz words in the sector. On the investment front, interest in core assets will continue, but investors will continue to unlock value potential in alternate assets such as data centers. AIFs will see greater traction this year.”
At the close of 2022, office leasing in India had crossed 50 mn sq ft, of which 14% corresponded to leasing by flex players, the highest in any year. As the market peers into 2023 amidst a looming global recession, and ongoing layoffs by tech companies, they are likely to increase their space take up in flex spaces as they offer flexible lease terms and aid cost control.
Focus on the upgradation of office buildings
At the same time, the focus on the upgradation of office buildings will be high on the agenda, as about 120 mn sq feet of Grade A offices befit for refurbishment in the top six cities of India. Within retrofitting, developers are likely to focus on improving building efficiency, design adequacy and building sustainability facets. These enhancements are likely to provide long-term benefits and help assets remain competitive in the market, resulting in tenant retention and rental upside. At the same time, occupiers will focus on making hybrid working more efficient with the seamless integration of CRE, HR and IT functions.
(To receive our E-paper on WhatsApp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)
