Flexible workspace stock is expected to cross 60 million sq ft in metro and non-metro cities by 2023, as occupiers embrace agility and flexibility in their work models, a report by Colliers and Qdesq has said.
The demand for flex space will be largely driven by consulting, IT-BPM and e-commerce companies who are establishing multiple satellite offices in suburban locations in metro cities. Metro cities remain the stronghold of flex spaces, accounting for about 88 percent of the total flex stock as of Q3 2021, said the report.
Flex space is also emerging in non-metro cities as large enterprises are moving to a decentralised structure focusing on flexibility and convenience of their employees. The total flex stock in non-metro cities to reach 7.8 mn sq ft by 2023, a 50 percent increase from current levels.
Major non-metros like Ahmedabad, Coimbatore, Indore, Jaipur, Kochi and Lucknow are witnessing robust activity and are the top six emerging non-metro flex locations, the report said.
“Reverse migration to Tier 2 cities, constant growth of new startups and increased occupier confidence driven by vaccination rates, have helped in overall improvement of the flex industry across the country. The flex market in India is evolving with many enterprises incorporating a flex space component in their portfolio. It is encouraging that flex spaces are currently operating at about 70 percent, with the trend moving towards pre-pandemic levels,” said Ramesh Nair, CEO (India) and MD (Market Development-Asia), Colliers.
Occupiers are looking at next-generation offices and the future workplaces will be unique to each occupier. Flex workspace operators must continue to focus on customization and providing on-demand workspaces, he said.
The flex market in India is evolving with many enterprises incorporating a flex space component in their portfolio. There are currently 3410 flexible centres across major cities, operating at about 70 percent, with the trend moving towards pre-pandemic levels.
“The next 12-18 months is expected to witness businesses of all sizes reassessing the use of their office. The importance of agility and decentralization has been underlined and highlighted by the pandemic and will become critical to businesses as they adapt to change, impelling the industry forward and that's what the future looks like for India. Making Flex mainstream,” said Paras Arora, Founder CEO, Qdesq.
Occupancy levels inching towards pre pandemic levels
After a dip in occupancy and prices during Covid-19, flex space is reviving in the latter part of 2021 with an average occupancy of 71 percent. Prices per seat have also seen an improvement by 21 percent as of September 2021, after falling by about 30 percent during the pandemic.
“Metro cities are seeing renewed demand from occupiers across the spectrum in the latter part of 2021. Even in non-metro cities, occupiers are taking up seats for their sales and regional offices, leading to higher occupancy. Occupiers are evaluating the concept of ‘work from near-home’ through satellite and hub-and-spoke offices. We foresee that these offices will be an amalgamation of traditional leases and flex spaces,” said Vimal Nadar, senior director and Head of Research, Colliers India.