Industry Views

Commercial Real Estate Projections 2022 – Office Spaces

What does the industry say about commercial real estate in terms of office spaces in 2022? A peek into the trends and the numbers early on.
January 10, 2022
4 mins read
Commercial Real Estate Projections 2022

Commercial real estate has been one of the most resilient investment options since their advent. Even during the peak of the pandemic, the Indian CRE (Commercial Real Estate) market stood its ground. The primary reason for this is the stability and security of this asset class. But what about the different sub-classes within it? In India, along with warehousing, industrial, special purpose, mixed use realty, commercial office spaces are also a very viable attractive option for investment. While the office market has been comparatively slow on the uptake in 2020 and the early half of 2021, things have been looking up for this asset class of late. Let us explore some views on how the market is going to perform in the coming year.

Commercial office space, and mostly Grade A office space can be available almost anywhere in India. Grade A spaces are newly built, have top-of-the line fixtures and amenities, and technological systems. They are in prime locations, like the city’s central business district and are rather aesthetically pleasing. Grade A commercial office spaces could also be including high rises and have large central lobbies as part of their structure. Generally, the maintenance and upkeep of such spaces is undertaken by reputable property management companies. The rental rates of Grade A office spaces are also on the higher side than the market average. Thus, naturally, the tenants of these spaces are established companies and organizations that have businesses in multiple locations across the country or the world. The pandemic situation that started in 2019 had an unprecedented effect on every market, including the commercial real estate market. After the initial shock, however, CRE was the first to stabilize and gain traction in the following years. At the advent of 2022, things are looking up for CRE, so let’s start from the office market.

As per JLL’s prediction, by 2022, the office space leasing is likely to hit 30-32 million sq ft, which is around the average of the last five years. The net absorption for office spaces shrank in 2020 and 2021 from their numbers in 2019. A major reason behind this reduced absorption is the adoption of partial or complete work from home models in companies. Leasing of fresh space slowed down considerably due to this and as result the net absorption in seven major cities was 25.66 and 26.17 million sq ft in 2020 and 2021 respectively.

In 2022, the trend will likely continue with regards to the top leasers being from IT and ITeS companies, manufacturing, and flex space operators. A recent report by Colliers also affirmed that office spaces are making a gradual and steady comeback – indicated by renewals for office spaces accounting for 30 percent of total leasing over a 15-month period. As per Avant India, the key trends that might carry on in 2022 are the following -

Hybrid Work Schedules – A survey from Prudential indicated that 68% of workers preferred a hybrid workplace model where they can afford the flexibility to work outside the office as well. The cost-saving perspective of this has already been experienced both by the employers and employees and this is likely to continue in 2022.

Proliferation of Co-working Spaces – Commercial office spaces in the co-working model is set to see a 20-30 percent increase in seat absorption. Adding more to the supply, flexible office spaces will also be explored by companies in Tier II and Tier III cities.

Increased Tech-enabled Environs – A lot of new spaces being created will have the adaptability to include AI assisted job roles, sensor-based automation, and robotics.

Retrofitting, Repurposing – A lot of perspective has been gained from the pandemic and that led large corporates and startups focusing on redesigning and repurposing the office spaces that they already occupied. This will be instrumental in freeing up more space and making available space more conducive to new tenants.

Sustainable spaces and Natural Touch – Prior to the pandemic, the average space per employee in an office used to be around 75-100 sq ft in the US, with 70-80 sq ft being the norm in India. This is set to change by a large margin going up to 100-200 sq ft in 2022, with the focus being on better ventilation, use of sustainable materials, indoor greenery, and an emphasis on physical social distancing.

It is expected that high density offices of the past will no longer be the norm from 2022 onward; at least till the pandemic situation is deemed less than fatal. That being said, in view of all the trends being observed by industry experts, there is a strong possibility that offices will pick up pace in the commercial real estate market once again, albeit with a few varied parameters. Rental growth has been steady in the last quarter of 2021 and it is expected to follow the same trend in 2022. As an investor, you should take your time to weigh in your options before you decide to invest in any real estate opportunity. With Strata, you get the insights to the market, the history of the asset, and impeccable due diligence with every opportunity. Do check out our asset listings on

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