Demand for premium office space to exceed 70 million sqft in 2024

The demand of premium office space across major cities is likely to exceed 70 million square feet this year and going forward as work-from-home is no longer a concern for the Indian commercial real estate market, said Cushman & Wakefield India chief Anshul Jain.

Cushman & Wakefield, one of the leading global real estate consultants, is bullish on the Indian office market, driven by high demand from global capability centres (GCCs) and domestic companies across major sectors. In an interview, Jain, Chief Executive, India & Southeast Asia and Head of Asia Pacific Tenant Representation, Cushman & Wakefield, said, "India is now being called the Office of the world interestingly. And the demand in India is one of the highest in Asia, and in fact the rest of the world." Indian office market across seven major cities is witnessing a very strong demand, with both gross leasing and net leasing reaching around pre-Covid level, he said.

"So, from an office market perspective, barring the year 2020 of course, and perhaps part of 2021, 2022 and 2023 have been very strong years and we do expect 2024 to continue to be an exceptionally strong year," Jain said. Asked about the demand outlook for 2024, Jain said, "The gross leasing activity in India will continue to exceed 70 million square feet this year. And I see the same trend kind of happening over the next kind of couple of years."

According to Cushman & Wakefield data, the gross office leasing across the top 8 cities stood at a record 74.6 million square feet while the net office space leasing was 41.1 million square feet during the 2023 calendar year. The highest net absorption was recorded in 2019 at around 44 million square feet. Elaborating more on office demand, Jain noted there is a huge demand coming in from new global capability centres (GCCs), he said, adding that the demand is also high from startups.

"India is the third largest startup community in the world. Startups are maturing, becoming unicorns, so they need sort of an organised space for their staff and they are expanding very fast," Jain said. The demand is also coming from healthcare, pharma, engineering, and manufacturing besides co-working office operators who are also contributing more than 10 per cent to the overall leasing demand.

"US firms still dominate the demand. 65 per cent of demand in India for organised office space actually comes from US companies. So, there is a pretty strong momentum, which gives us confidence that the gross leasing volumes will continue in excess of 70 million square feet," he said. On whether 'work from home' is still a cause of concern, Jain said, "Not at all. I think we have completely overcome that phase."

Recently, he said, "I read an article in one of the newspapers where we read that Cognizant has finally given a diktat to their people to kind of come back to office. So, even last of the companies, which were resisting coming back to office are coming back to office. And this is the interesting piece, right."

Jain noted that the headcount for most of these multinationals is significantly higher than 2019 level.

"Most of these firms have very similar property portfolios than they had in 2019. So, while work from home is definitely over, some level of hybrid is here to stay. But on an average, the headcounts gone up by 50 to 60 per cent. But even with some level of hybrid, most firms are out of space...," he said. Jain also highlighted that corporates are focusing a lot on environment and sustainable elements while scouting for office space.