Office space demand may fall by 5-15 per cent as corporates look to adopt to work from home (WFH) policy, but offices will not lose their importance as remote working poses various challenges like data privacy and staff productivity, according to top officials of eight property consultants.
This minimal impact on office demand in the medium term could get compensated from additional space that corporates might need to maintain social distancing among staff andcontrol the spread of the coronavirus disease, they said.
In the post COVID-19 era, the demand for office space could rise from emerging sectors as well as new geographies, said these top consultants, who help corporates in leasing office space.
"Given that WFH challenges such as teamwork, performance management, productivity, creativity, data privacy, apartment sizes, office infrastructure and connectivity, we believe anywhere between 5-15 per cent of office demand could be impacted in the medium term," JLL India CEO and Country Head Ramesh Nair told PTI.
This loss of demand is also expected to get neutralised by de-densification and demand from post-COVID emerging industries, he added.
"Also anxiety, loneliness, stress and depression can impact adoption of WFH," Nair said.
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Knight Frank India CMD Shishir Baijal said, "WFH will co-exist, but office space will not lose its importance as a strategic tool for corporate culture development and a source of competitive advantage."
Going forward, especially in the post-pandemic phase, he said more formulae will be devised which will include "work from near home" alongside work from office and WFH.
"This will, in the long term, ensure there will be office developments not only in the top 8 cities but also in smaller towns, where employees originate from," Baijal said.
He noted that employers now feel that WFH could be an alternative workplace strategy.
Baijal said, "social distancing is here to stay, till a viable treatment for COVID-19 is found, which will require office users to maintain or acquire more space to accommodate the existing team."
He said office space leasing will decline in 2020 due to delays in decision making by the corporates.
Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa, CBRE, said, "Given the fact that the COVID-19 situation is fluid and ever evolving; it's too early to call anything a trend, as yet."
He believed that health and wellness of employees could take centre stage for majority of the corporates.
Office space absorption would continue to remain dominant, Magazine said.
Anarock Chairman Anuj Puri said, "WFH is not a catch-all solution - many business verticals and functions still require employees to work in an office setting."
A large chunk of work needs constant monitoring and professional infrastructure which only an office setting can provide, he said.
"There are several socio-economic and logistical advantages to working from offices which may not be replicable in WFH settings. Companies will particularly need to figure out the equation on employee productivity, morale and overall branding," Puri said.
Anshul Jain, MD (South East Asia and India), Cushman and Wakefield, said, "Our current situation has forced us to work from home and we all have done a splendid job without a doubt. But it was always clear that this was temporary, and there weren't any distractions."
"Most people are looking forward to going back to the office, reclaiming the routine and getting back the human interaction in their work lives," he said.
Jain said one must not overlook the fact that most people don't have the ideal home work environment.
"Work flexibility will see a rise, as will de-densification of office spaces but that shall not translate into an adverse impact on office demand," he said.
Savills India CEO Anurag Mathur said a small part of the physical workspace might make way for work from home as a result of COVID-19 event.
"However, it is unlikely that virtual workspaces or work from home will completely replace office spaces in the near future," he said.
For reasons of collaborations, closed door meetings, data or information protection, speed in brainstorming, and multiple other managerial and operations issues, office spaces will continue to remain dominant, Mathur said.
"While we believe that work from home may become a more acceptable norm going forward, we do not see any significant impact on office demand in future," he added.
However, Arnab Ghosh, National Director, Fitout at Colliers International India, said, "Work from home is a new reality today because of an unprecedented pandemic, but for it to be a norm, it needs to overcome quite a few social, cultural, and infrastructural challenges."
Shrinivas Rao, CEO-APAC, Vestian, said the question of whether WFH works has been answered, thanks to its forceable implementation during the COVID-19 pandemic.
"Going by the recent feedback from the industry, the concept is here to stay. The current situation is expected to impact the commercial office space take up in short to mid-term (6-12 months) in India," he said.
The lack of clarity of how to house the employees at the workspace during these times is bound to delay the decision making, thereby affecting the absorption of office space by at least two to three quarters, Rao said.
"From business continuity planning, WFH works not just from a business perspective but also ensures safety of the intellectual capital of the firms and employees.
"However during this phase the cost-effectiveness and productivity of employees will be closely monitored over the next few quarters, based on which employers will take a conscious call on whether employees continue to work from home or office," he said.
Despite a multi-year demand slowdown in the Indian real estate, office market has been performing very well for last few years.
Net office space leasing stood at 47 million sq ft in 2019, while gross numbers were in the range of 55-60 million sq ft.
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