The Hybrid Work Model Raises The Demand For Office Space

Demand For Office Space : Companies have been attempting to reinvent and accommodate the new normal as the economy strives for pre-pandemic growth. The decreasing COVID caseload has encouraged organisations to adopt a hybrid work model. However, how does it fit into India’s heavily office-dependent work environment, and what is the future of such workspaces? Find out,!

The onset of COVID-19 and subsequent lockdowns brought the office industry to a halt. Since March 2020, the office sector in India has seen some of the most unfortunate events, including the closure of workspaces, the depletion of profit margins, and significant pay cuts. However, it brought to light the potential of the remote work model as organisations began delegating tasks to employees to work from home. COVID’s impact began to fade as the Centre and State governments took proactive steps to vaccinate citizens aged 18 and up.

This prompted many organisations to implement the hybrid work model, which combines remote and on-site methods. Because this model requires businesses to provide employees with workspace, the demand for offices has increased, and this trend is expected to continue in the coming months.

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What does the transition to a hybrid workplace mean for real estate?

Commercial Real Estate (CRE), which caters to office space demand among other things, is expected to grow by about 8% in 2022. With the increased implementation of the hybrid work model, the co-working space sector has seen a 20-30% increase in occupancy.

According to an industry report, office space absorption in H1 2022 will be nearly 21 million square feet, up from a little more than nine million square feet in the first half of 2021. Another industry report predicts that commercial space leasing will reach 60 million square feet in 2022 and 2023.

According to the Colliers survey, employees in the hybrid model have shown a significant improvement in productivity, which is expect to boost demand in the CRE sector. With companies incentivizing employees to switch to the new work model, it bodes well for real estate and may hasten its recovery.


Demand For Office Space : What do the reports imply?

According to the Colliers survey, more than 60% of Indian organisations now prefer the hybrid work model. Banking, Financial Services and Insurance (BFSI), and engineering firms are the primary drivers of the hybrid trend among the small, medium, and large-sized firms surveyed.

The overwhelming response to the new work style has prompted approximately 40% of the surveyed companies to consider expanding their portfolios in the next 6-18 months. According to another Colliers survey published in August 2022, approximately 34% of companies in India have already seen 75-100 percent of their employees adjust to the hybrid model.

According to JLL’s Q2 2022 Office Market Update, Gross Leasing Volume (GLV) has increased by more than 35% QoQ. In terms of the country’s office space leasing, H1 of 2022 has vastly outperformed the corresponding periods of 2019, 2020, and 2021. Furthermore, office space vacancy has decreased by 10 basis points to around 16 percent, and leasing values have increased by close to 2% year on year.


Is there an increase in the demand for office space?

According to experts, the COVID-led reverse migration has shifted the spotlight away from Tier-1 cities as the only corporate hubs and toward Tier-2 cities. While Delhi NCR, Bangalore, Mumbai, and Hyderabad continue to top the GLV charts, approximately 35% of organisations are considering expanding into Tier-2 or non-metro cities.


Demand For Office Space: How is the market for flexible workspaces faring?

The hybrid work model has contributed to the increased acceptance of flexible or co-working spaces. After accounting for only about 6% of office space absorption in the first half of 2021, the segment now accounts for around 20% in the top seven metros during the same period in 2022.

According to the Colliers survey, approximately 60% of large enterprises want to distribute teams across workspaces. Flexible workspaces are set to become mainstream in CRE, with occupiers viewing flexibility as a critical component for returning to the office in the post-pandemic scenario.





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Disclaimer: The views of this expressed above are for informational purposes only based on the industry reports & related news stories. does not guarantee the accuracy of this article, completeness, or reliability of the information & shall not be held responsible for any action taken based on the published information.
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