CHENNAI: The dormant office spaces and shopping malls are now bustling with activity. The strength in offices which have been functioning with meagre staff has increased.
This has resulted in developers hoping for positive signs in the revival of the office space sector in the second half of next quarter.
"The office space in Chennai which was hit hard by the lockdown witnessed 2.1 million square feet of office space leasing activity, which translates to approximately one-fifth of the all India activity.
"In terms of area, there has been a 16 per cent reduction in absorption, the least in the top six cities of the country," says India Market Watch –H1-2020 released by International Property Consultants, Savills India.
Anup Vasanth, managing director of Chennai Savills India, says that during the first quarter of the financial year many of the firms like Cognizant, realised its plans to move to Mount Poonamallee in 4.7 lakh square feet of office space and Bank of New York moving to a new site in Pallavaram Thoraipakkam.
"These are the deals which happened in the first quarter where in 1.5 million square feet of office space deals happened," says Anup while adding that in the second half this dwindled to 500 million square feet office space was absorbed," he says.
However, this could not be a rosier picture. The reason being the notice period many of the firms are serving. A clearer picture is to emerge in the next six months.
S Sridharan, CREDAI chairman, Tamil Nadu Chapter, told Express that he is positive that the office space activity will improve once the lockdown is eased. He says that work from the office is not that productive.
A Shankar, Chief Operating Officer, Strategic Consulting, Jones Lang LaSalle (JLL) says things will improve in the next six months.
"The office work culture is set to undergo a change. There will be changes in the design of office space with thrust on social distancing," he says.
He says there will be demand for office space but a clearer picture will emerge in the next one month.
Meanwhile, real estate consultants claim that the work from home concept will still continue.
"Although it has declined from 100 per cent in the initial phase of lockdown to around 50 to 60 per cent now, I hope at least 12 to 15 percent of workforce will continue to work from home," says Shanking while belittling the claims that IT enabled services and many IT companies will continue to work from home.
Vasanth says that this could also result in a hub and spoke model where IT offices may do away with some of the office space and lease it near the residences of workers.
"There has already been some activity in this regard," says Vasanth.
According to data available from Savills, during January-June 2020 period, office absorption in six major cities which include Mumbai, Chennai, Hyderabad, National Capital Region, Pune and Bangalore, stood at approximately 13.7 million sq. ft. as compared to 32 million in the corresponding months a year ago.
While this pattern may change during the second half, if the pandemic led crisis persists, India’s focus on its traditional sectors may need to increase, necessitating vital policy initiatives as well, according to the report.
Rangarajan committee report to be submitted next week
The high-level committee headed by former Reserve Bank of India governor C Rangarajan to assess the overall immediate impact of Covid-19 pandemic on different sectors of Tamil Nadu economy is set to submit its report next week.
This comes as the state is slowly trying to get back on its feet after relaxing the lockdown and allowing free movement of goods and transport.
"The committee will submit its report to the government next week," said an official source. The panel will also assess the impact of the lockdown, additional costs and implications due to social distancing and their precautionary measures.
Besides assessing the opportunities and threats in the short and medium term, the committee will come out with measures required to help the important sectors of the economy to overcome the Covid-19 pandemic.