As large number of companies and businesses resort to the work-from-home culture for their employees, Ashutosh Limaye of Anarock Property Consultants has said that demand for conventional office space is likely to be impacted to some extent for at least two quarters.
He, however, noted that work-from-home is not a "catch-all solution" as 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, adding that market dynamics are, nevertheless, changing quickly now.
"Commercial real estate has been a reliable mainstay of the Indian real estate sector, remaining vibrant even while residential property remained in the doldrums. Now, the coronavirus has thrown a serious spanner into the works of this lucrative real estate segment, at least for next two quarters," said Limaye, the Director and Head, Consulting at Anarock Property Consultants.
He noted that due to the current lockdown situation, more and more companies are discovering the viability of employees working from home (WFH) as an alternative to occupying costly office spaces.
Many IT and IT-enabled service companies and other corporates are now warming up to the notion of shifting a significant chunk of work, be it coding or non-client-facing back-office functions, out of offices and into their employees' homes, he said.
Outlining the benefits of the work from home trend, Limaye said that companies can save a lot of revenue on office space occupancy and it can also be a major productivity enhancer as employees save the time which they would ordinarily spend on daily commutes.
"As a derivative of the second benefit, it can significantly boost employee well-being," he said.
On the co-working segment, Limaye said that it is likely to see subdued demand over the next few quarters, but will also see the fastest revival as the pandemic pressures will eventually ease out many businesses who will look to restart in these flexible workspaces.
Co-working spaces are not only the most cost effective, but also offer flexibility in terms of time period of rental agreements, he added. Co-working spaces can be rented on a monthly, day-to-day and even hourly basis.
Traditional offices, on the other hand, he said, are a source of worry for both tenants and landlords right now.
"This is because it is difficult to visualise and plan for a post-pandemic market scenario," he said.
When the government's focus shifts back to economic growth and it rolls out business-boosting incentives, that will revive the fortunes of commercial office spaces quickly, Limaye added.
Data collated by Anarock shows that average monthly rentals in Grade A office spaces in central business district (CBD) areas like South Mumbai and Bandra Kurla Complex are between Rs 18,000-27,000 per desk per month for co-working spaces, and between Rs 24,500-30,000 per desk per month for conventional commercial Grade A offices. All non-Grade A office spaces in CBD areas are lower by at least 15-20 per cent.
In the national capital, average monthly rentals in Grade A office spaces in CBD areas like Connaught Place range between Rs 13,000-19,000 per desk per month for co-working spaces and between Rs 20,000-25,000 per desk per month for conventional commercial Grade A offices.
Non-Grade A office spaces in the CBD areas in Delhi are at least 15-20% cheaper, the data showed.