With offices and corporates locked and work from home becoming the norm amid the Covid-19 pandemic, office-leasing activities in Pune came down by 30 per cent for the second half of 2020, as per a new report. The only green shoot in the picture was the strong emergence of co-working spaces in Pune, which reported a significant increase in transactions.
The 14th edition of property consultant Knight Frank’s real estate report, which was launched on Wednesday showed that office-leasing activities have gone down by 30 per cent year-on-year (YoY) to 0.16 million square metres in the second half of 2020. New office completions came down by 80 per cent, to 0.05 million square metres during the period. As labour remained absent, completion of ongoing projects was also hampered during most part of 2020.
Post the starting of Mission Begin Again, things started moving up with the last quarter of 2020, with 919 per cent growth reported as compared to the previous quarter. The biggest gainers in the office space segment have been the co-working spaces, which have seen substantial growth. “Co-working became the largest occupier segment during H2 2020 and their share of transactions has grown from 31% during H2 2019 to 42% during H2 2020,” the report read.
One of the main reasons for the popularity of the co-working spaces is the flexibility of operations it allows. While it is too early to take a final call on the matter, many felt that given the fluid situation of the pandemic, most offices would prefer work from home to continue for some more time. “The operators believe that once these limits of utilisation of office space are lifted, companies would look to avoid spending money on office capex given the business uncertainties and look at flexible office spaces with renewed vigour, as it can be scaled up or scaled down as required,” the report said.
Co-working operators have become bullish about their business prospects and have been actively taking up spaces. In terms of the sectorial occupier share, Co-working dominates with a 42% YoY share in H2 2020, followed by other services with 25% YoY, Manufacturing with 16% YoY respectively. During H2 2020, only two micro-market, PBD East (Kharadi, Phursungi, Wanowrie) and SBD East (Kalyani Nagar, Yerwada, Nagar Road, Hadapsar) witnessed exponential transaction growth of 375% YoY to 0.86 mn sqft and 50% YoY to 0.62 mn sqft in H2 2020 respectively.
Paramvir Singh Paul, branch director Pune said the despite a strong start to the year, office space absorption has taken a severe hit due to the lockdown and many went slow on their expansion plan.
He said, “However, things recovered in the last quarter and the leasing came back to normal pre-Covid levels, led by demand from co-working segment reaching 99% of 2019 quarterly average. The overall demand from IT sector in H2 was low due to the limitations of office workforce capacity, which have been in place for over nine months. Other cities with lower restrictions on office utilisation compared to Pune have witnessed demand recover faster. We believe a similar trend to play out in Pune as well and the demand for office spaces would recuperate once these restrictions are lifted”.
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