Two years on, flex workspaces make a surprise comeback
Flexible workspace operators have seen a resurgence in India as companies bring employees back from remote work after a two-year period
Flexible workspace operators have seen a resurgence in India as companies bring employees back from remote work after a two-year period.
Demand for workplaces that offer flexibility, customization, and short-term leases rebounded in 2022 and has prompted operators to increase their expansion efforts this year.
Flexible office operators leased 7 million sq. ft of space in 2022, the highest in any year, accounting for about 14% share in total commercial office space leasing, according to a recent report by property advisory Colliers.
The recovery followed two years when service providers closed centres, offered massive rent discounts and renegotiated contracts with landlords as people worked from home.
The challenges faced by flexible office operators during the pandemic were rooted in the ease with which customers could exit short-term leases compared to longer traditional office leases.
“2022 was a watershed year for the flex workspace sector. Even pre-covid, shared workspaces accounted for around 6-7% of the overall office leasing. We are seeing increased adoption of the flex model by larger enterprises, and that is expected to grow further,” said Kunal Walia, chief executive officer and founder of Simpliwork Offices.
Simpliwork, a workplace solutions provider to companies, plans to double its portfolio by adding 2-2.2 million sq. ft of space across eight cities in 2023-24.
The shared workspace industry has evolved from a co-working setup to managed offices, offering clients flexibility and customized solutions, amenities, and other services.
Yet, even as organizations struggle to bring employees back to offices, many believe a hybrid work model with flexible work options is cost-efficient and more effective.
Though the focus remains on the top metros, the work-from-anywhere model in the post-pandemic era has also led operators to open centres in smaller cities.
Shared workplace provider Awfis plans to touch 300 centres, up from 150 currently. It is opening centres in Coimbatore and Lucknow and expanding in Nagpur, Kochi and Indore, among the top cities.
“The global recessionary headwinds may impact large conventional space take-up, but not flex, because companies then tend to move towards flex options. It’s a lot like quick service real estate where the number of locations one is present in is a key factor,” founder and chief executive Amir Ramani said.
Today, nearly 60-70% of the overall shared workplace business is concentrated in the top 7-8 operators, including WeWork India, Smartworks, Indiqube, Awfis, Simpliwork and Table Space.
WeWork India, for instance, plans to grow its 6 million sq. ft portfolio to 8 million sq. ft by December 2023.
The recovery and growth post-pandemic have benefited mid-sized and smaller operators as well.
Gospaze, a Bengaluru-based co-working provider for bootstrapped startups, was forced to close down both its centres for a few months after the pandemic struck in 2020.
After the second wave of covid in 2021, people started coming back in a staggered manner. However, the positive signs of revival in demand happened in 2022.
“We recently launched a centre in Indiranagar, opening one more in Whitefield, and are in talks for a fifth centre in Koramangala. But we look at smaller 100-150 seat centres, which is a sweet spot for us,” said Shinoj Nambiar, founder of Gospaze.
Operators are also increasingly leasing offices in Grade A spaces, led by higher demand from large enterprises. Bengaluru and Pune contributed more than 50% of flex space take-up last year.
“The pandemic increased the acceptance of working from a flexible environment. This was helped by the acceleration of technology, which made booking a seat at a centre to running large teams in these setups much easier. Flexi workspaces have been growing exponentially, and with many companies not wanting to commit long-term capital, they will continue to grow,” said Peush Jain, managing director of office services, India at Colliers.
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First Published:15 Jan 2023, 11:04 PM IST
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