Real estate pundits are factoring in a modest recovery in office space absorption in 2022 on the back of rapid pace of vaccination, gradual opening up of international travel and select corporates recalling their employees back to office.

Net absorption of office space may go up to 26.8 million square foot (msf) in 2022, ICICI Securities in a recent note to its clients said, compared with 18.5 msf expected in this year. Net absorption of commercial real estate (office space) stood at about 20 msf in 2020, more than halved from the previous year as Covid-19 forced employees to work from home leading corporates to either defer planned leasing or scrap them altogether.

As India continues to offer competitive rentals of about $1 per sq foot a month compared with other competing countries, the southern states, NCR and Pune where the hub of IT and ITeS companies are mostly located may see leasing activities pick up from January onwards.

Key risk to the forecast would obviously be a possible third wave of Covid-19 in India and in the United States and European Union, which together account for two-third office absorption in India, the report added.

There appears to be a broad consensus among pundits that 15-20 per cent of the workforce will always work from the office and 10-15 per cent of the employees permanently work from home. The balance 60-70 per cent of the workforce is expected to follow a hybrid model of working partly from home and partly from office.

International real estate consultancy JLL concur with the view of gradual revival. “The office market has been progressive in Q3 2021 and this momentum is expected to continue in the coming quarters as the demand for office spaces will continue to expand backed by consolidation and expansion of office spaces by occupiers and increasing demand for satellite offices,” Radha Dhir, CEO and country head of JLL, said.

JLL noted the markets of Bangalore, Delhi NCR and Hyderabad accounted for about nearly 60 per cent of the net absorption during the quarter.

“Around 35 million sq ft of Grade A office space was completed in January-Sept 2021 which is a 53 per cent increase when compared with the same period last year.

“The growth pace of new completions show that developers are confident of a strong revival in office leasing activity once business as usual is reinstated,” said Samantak Das, chief economist and head research and REIS, India, JLL.