August 5, 2021

The resilience of India’s Office Markets During the Pandemic

It has been over a year since the COVID-19 pandemic disrupted our personal and professional lives and pushed us to adapt to new work cultures. After the first wave of COVID had subsided in late 2020, companies gradually brought a portion of employees back to offices. Lives were slowly returning to normalcy until the second wave broke out early this year, forcing offices to close down again. Though the second wave did impact the official real estate, developers believe that it is a short term phenomenon and the sector will bounce back soon. The dip in the number of daily covid cases and the increase in inoculation drives across the country, along with the rapid expansion and hiring spree of global technology companies in Tier 2 & 3 cities, imparts hope to the office real estate market in India.

Indian office market during the pandemic

Even during the effects of the pandemic in 2020, India’s office real estate had witnessed record new office leasings and renewals. A report from JLL says that the net absorption (the increase or decrease change in the supply of commercial space in a real estate market) of office space in India in 2020 were 25.6 million sq. ft, while new completions were recorded at 36.3 million sq. ft. Cities like Bangalore, Chennai, Hyderabad, Kolkata, Pune, Mumbai and Delhi NCR witnessed high office leasings in Q3 and Q4 of 2020, as developers had ensured quick closures post the first wave.

Prominent companies that committed office space in Bangalore last year were Amazon- 13 Lakh sq. ft, Google- 10 Lakh sq. ft, Apple- 3.5 Lakh sq. ft, Ola- 4.5 Lakh sq. ft, Siemens- 7.3 Lakh sq. ft and Continental Automotive- 8.5 Lakh sq. ft, says a report from The Hindu Business Line. In Q2-2021, the Indian office market had a net absorption of 4.39 million sq. ft, indicating 32% year-on-year growth in major cities like Bangalore, Mumbai, Pune and Kolkata. When compared to the last quarter, the net absorption dipped by 16% due to lockdown restrictions in Q2. But the quarter-on-quarter drop was lower than 61% during the same period in 2020, which reiterates the resilience of the market. The overall Indian office market witnessed a net absorption of 9.63 million sq. ft in H1 2021 and is expected to have more than 38 million sq. ft of new completions this year.

Kerala’s booming office market

The office markets in Kerala has also been in a state of revival since 2020. IT companies remain to be the major consumers of offices spaces in Kerala. Global IT firms are in the process of expanding their operations in Tier 2 cities in Kerala like Trivandrum and Kochi due to favourable factors like availability of talent, robust supply chain network, engineering and research facilities. Tech giant IBM has already started recruiting for their Kochi centre and plans to start a centre in Trivandrum. Moreover, companies like Nissan Digital, Ernest and Young (EY), Infosys, UST Global are on the verge of expansion in Trivandrum. The proposed development centres of online Edtech platform Byju’s in Technopark Phase 3 and TCS in Technocity will also be a major addition and will create hundreds of thousands of jobs in Trivandrum.

Measures adopted to bring workforce back to offices

The state governments and companies have initiated various steps to bring the workforce back to offices. As the unlock process has begun across the country after lockdowns, the state governments are granting permissions for the offices to restart operations as IT campuses also support the livelihood of many other employees like housekeeping staff, drivers, security staff and caterers. A major step taken by companies and NGO’s is conducting mass vaccination drives for their employees and families.

Kerala IT parks, in association with Technopark Employees Co-operative (TEC) Hospital, had conducted a mass vaccination drive for the IT community across the state in June 2021, which was also extended to other IT parks like Infopark in Kochi in Cyberpark in Kozhikode. More than 450 companies took part in the first phase of the mass inoculation program in Technopark, where more than 50% of the employees and their families received the first dose of vaccine.

Taurus India, along with Embassy Group, had also conducted a vaccination drive in Embassy Taurus TechZone site in Technopark, Trivandrum, vaccinating 300+ employees at the site and their families. Apart from vaccination drives, companies also ensure thermal screening procedures, frequent sanitization and deep cleaning activities in the office premises to welcome employees back to offices.

Hybrid work culture

Moving forward, companies will not function the same way it was before the pandemic era, as they will have to adapt to hybrid work culture. Google CEO Sundar Pichai had recently sent out a mail to its employees regarding the company’s decision to switch to a hybrid workplace- where 60% of the employees would come to the office a few days every week; another 20% would work from home and remaining 20% would work from a place of their choice. Experts say that a third place would emerge popular among employees for work in the long run beyond homes and offices, which could be cafes or flexible co-working spaces. However, the safety of employees would be the prime concern of companies while bringing them back to work.

The possibility of a third wave of infections has already been predicted. But companies have adapted to the new normal and is better prepared to deal with the pandemic. The increased attendance of employees in offices across major markets before the second wave reiterates that the office sector would bounce back more powerful eventually.