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The demand for office spaces took a severe hit post the coronavirus pandemic in March 2020. The increased trend of working from home prompted office space occupiers, especially in Grade A properties, to delay renewals of lease agreements, thus weighing on rentals.

However, a new study by investment management company Colliers and real estate agency CBRE Matrix shows that startups are expected to lease about 29 million square feet between 2022 to 2024, a 1.3 times increase from the 2019-2021 period. Their share in office leasing is anticipated to rise from a mere 2% in 2010 to 13% by 2024.

Given the increased digital adoption and e-commerce boom in a post Covid world, fintech and logistics startups are seen asa demand drivers for office spaces. The study shows that Bengaluru remains the top startup hub with a 34% leasing share during 2019-21, followed by Delhi-National Capital Region. Delhi-NCR witnessed a three-fold increase in leasing by startups during 2021 on a year-on-year basis. While Mumbai has seen some pick-up in this segment, relatively higher rentals are seen a hurdle for companies in early-stage of operations.

Meanwhile, IT companies continue to have the lion's share in office leasing, although their contribution has shrunk in the recent quarter. Property consultant Knight Frank India's analysis of commercial realty sector showed that the share of IT industry in the second half of calendar year 2021 (H22021) in overall leasing transactions has declined to 27% from 41% in the same period last year. Nonetheless, with the IT sector witnessing strong demand and many key Indian IT companies already opting for back-to-work theme, the demand for office spaces would witness a gradual revival, say experts.

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