'End of WFH': Why office leasing will dominate real estate occupancy in FY24

Office leasing has sustained through 2022 and a recently released CRISIL report has shown that the sector could sustain 10-15 per cent growth through 2023. Here are three key reasons:

Return To Office

Breaking the spell of three years of work-from-home trends, employers increasingly started showing their preference for working from the office through 2022. This has led to fresh demand for office seating arrangements and in return, an expansion of office space across the country. In an outlook report presented by CBRE, office leasing activity is “likely to normalise in 2023”. “Bangalore, Delhi-NCR, and Hyderabad to remain the biggest demand drivers while sustained leasing activity is also expected in Mumbai, Chennai, Pune, and Kolkata. Select tier-II and tier-III markets would also continue to attract attention from corporates preferring to locate closer to their talent pool,” the report stated. Uddhav Poddar, Managing Director Bhumika Group told Business Today, “The pandemic increased the popularity of hybrid office spaces like co-working. In the current growing economy, most businesses are on an expansion mode, plus India is now emerging as a new manufacturing hub and hence according to the experts, office leasing is expected to grow by over 15 per cent in FY24.” 

Industrial expansion
Rapid expansion of industrial facilities and space is another reason for the increase in office-space demand. “Geographical expansion of industry giants has given impetus to leasing across working hubs; epicenters of companies such as Gurgaon account for 80 per cent of total office leasing in the whole NCR arena,” Manik Anand, CEO, White Knights Realty said. “Price dynamics currently remain rather volatile with a probability of a hike in the coming times. This is in tandem with the co-working sector which accounts for nearly 20 per cent of the transacted space an approximately USD 2.5 billion institutional investment in real estate has been observed.

Entrepreneurial dreams and need for new office space
The pandemic has also unleashed the entrepreneurial spirit and many people have started setting up new businesses over the last year. This has led to an increase in the demand for fresh office. Sumit Agarwal, Director, Sales and Leasing, Bhutani Grandthum told Business Today. “Rise in entrepreneurship had added pace to this trend which was set off by work from home coming to an end. However, we haven’t yet breached the top levels of around 42 million sq ft seen in the fiscal ending in March 2020. The potential is vast, and we expect a robust office space absorption in 2023.”