India’s inventory of flexible office space is expected to grow 10-15% annually over the next three years at a time when the pandemic leads more companies to adopt the hybrid workspace model, according to property advisory CBRE South Asia Pvt
As companies adopt the hybrid workspace model, India’s flexible office stock is expected to grow by 10-15% year-on-year (y-o-y) over the next three years, property advisory CBRE South Asia Pvt. Ltd said in its new report "The Future is Flex".
The flexible workspace stock in the country is currently 36 million sq. ft, according to the report, which highlights emerging trends and future expectations in the flexible space segment.
As of the March quarter, Bengaluru holds flex stock of 11.6 million sq. ft, the maximum in the country, followed by Delhi-National Capital Region (NCR) at 6.6 million sq. ft, and Hyderabad at 5.7 million sq. ft.
While these cities, along with Mumbai, will continue to see further demand, flex demand in cities such as Pune and Chennai are also expected to see growth in the coming years.
In 2020 alone, over 75,000 seats were leased in flex spaces across the country.
Additionally, with an expanded range of flexible space options, and increased focus on hybrid working models by enterprise clients, tier-II and -III markets are also expected to witness an increase in flex demand. Tier-II activity is expected to be dominated mostly by domestic operators during the next couple of years, the report added.
“We are witnessing an accelerated change in performance, expectations and role of the workplace. Firms have been successful in changing their strategies to ensure seamless functioning, while effectively leveraging potential changes in work styles. While for many, the work from home culture may continue, the demand for physical workspaces is expected to be driven by flex offerings," said Ram Chandnani, managing director, advisory and transactions services, India.
Post the mass vaccination, flexible space operators are likely to prioritize expansion with a focus on efficiency, the report said.
Operators will focus on improving tenant profile and profitability in operational centres by further adding amenities, tech enhancement and layout changes. There will also be a higher focus on customized solutions, including an emphasis on higher flexibility, innovative solutions, and deal structures such as reverse officing, fit-outs as a service, pay-per-use models, and all-access products, among others.
CBRE said there would be "creative" partnerships with landlords, where the latter would consider undertaking partnerships or management agreements with operators post the pandemic and are likely to be more open to structuring portfolio tie-ups.
“The pandemic influenced the way businesses function and their overall strategies. Businesses are evaluating new working models that keep workplace flexibility at the centre, balancing employee benefits and business profitability. These models will not only ensure flexible working but also ensure employee safety once offices resume normal operations. The demand for physical office spaces will continue to rise as employees look forward to normal workdays; with mass vaccination propelling further sectoral growth," said Anshuman Magazine, chairman, India and South-East Asia, Middle-East & Africa, CBRE.
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