According to India Ratings and Research (Ind-Ra), negative demand created by the work-from-home culture along with reduction in fresh leasing activities due to a weaker economy may save 40 per cent off annual demand over the next few years.
Ind-Ra further said that WFH can result in over 500 basis points increase in vacancy levels over FY21 to FY23. “The impact on upcoming office space providers is likely to be particularly sharp as these may struggle to let out their upcoming properties.”
Ind-Ra said such a transition to working remotely can seriously hamper office real estate demand as it may allow companies to use a hot desking policy where the same desk may be shared by a number of employees who report to work on different days. If 2.5 per cent of overall employees are asked to report to work on alternate days and use the hot desking policy, it may result in a net 1.25 per cent reduction in office space required in a country.
On a base of 635 million square feet of office space occupied in top eight cities of India at FYE20, said Ind-Ra, it will result in a negative demand of 7.9 million square feet which is 21 per cent of the average annual demand seen during FY19 to FY20.
“A larger impact of hot desking might shave off several years’ of demand in the short run and create significant hardships for office real estate providers,” says Ind-Ra.
Besides, a number of international companies have announced hybrid work models where the employees will need to report to office only on a few days of the week. Ind-Ra said it can be easy to infer that the space that may be subject to hot desking model may be a lot more than 2.5 per cent as envisaged.