Covid-19 impact: Office space leasing by co-working players to fall 58% in 2020, says report
Leasing of office space by co-working players is expected to fall 58 per cent year-on-year to 3.4 million sq ft in 2020 across six major cities due to lower demand of flexible spaces from corporates, according to property consultant Savills India. In 2019, the co-working operators had leased 8.1 million sq ft office space across six major cities -- Delhi-NCR, Mumbai, Bengaluru, Hyderabad, Chennai and Pune.
In its report, Savills said it “expects 3.4 million sq ft of take-up by coworking players in 2020, recording an 11 per cent share of the total office leasing activity”. The overall leasing activity is expected to reduce significantly in 2020 as against 2019, owing to delayed decision making by the occupiers, the consultant said but expected the numbers to increase steadily over the next two years.
As per the data, leasing of office space by co-working players in Bengaluru is estimated to fall at 1.1 million sq ft in 2020 from 2.3 million sq ft last year.
In Hyderabad, it is likely to drop to 1.1 million sq ft this year from 2.1 million sq ft.
The Delhi-NCR market will see co-working players leasing at 0.2 million sq ft in 2020 as against 1.5 million sq ft last year.
Leasing of office space by co-working segment in Pune and Mumbai is estimated to drop to 0.4 million sq ft during this year. Pune witnessed 1 million sq ft and Mumbai 0.6 million sq ft absorption in 2019.
In Chennai, 0.2 million sq ft is expected to be leased by co-working segment this year as against 0.6 million sq ft in 2019.
However, Savills India estimated the leasing activity by co-working operators to increase 42 per cent to reach 4.9 million sq ft in 2021 over 2020.
The share of coworking space take-up in overall office leasing activity is poised to rebound to about 15 per cent share in 2021, similar to the 2019 level.
In the year 2022, the number is expected to witness a further 25 per cent annual growth and register leasing activity of 6.1 million sq ft. “Over the years, shared office space has emerged as a separate asset class, bringing significant cost-advantages to occupiers,” Savills India MD, Research and Consulting, Arvind Nandan said.
At a juncture when co-working spaces were seeing strong growth, the outbreak of Covid-19 has changed the rules with social distancing and de-densification of workspace becoming imperative, Naveen Nandwani, Managing Director - Commercial Advisory & Transactions, Savills India said.
“However, we believe that flexible workspaces will reinvent and reposition themselves, emerging stronger on the other side of the pandemic,” Nandwani added.
UK-based Savills began its India operations in early 2016.