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Co-working stock up 50% to 15 million sq ft: CBRE Report

Bengaluru and Delhi-NCR largest markets for flexible spaces in India, with a combined share of almost 55 percent in overall flexible space stock

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The stock of flexible space market in India increased by almost half from almost 10 million sq ft in 2017 to about 15 million sq ft by the third quarter of 2018, making it among the biggest markets in the APAC region, says a new report.

Co-working operators are expected to lease about 7-9 million sq ft by 2020 from over 5 million sq ft estimated this year, according to property consultant CBRE.

Bengaluru and Delhi-NCR were the largest markets for flexible spaces in India, with a combined share of almost 55 percent in overall leasing by flexible space operators. The report also highlights that flexible spaces account to approximately 1.7 percent of total stock in Asia-Pacific; Shanghai and Delhi-NCR are the only two cities where flexible space share is more than 3 percent of the overall office stock, says the Flexible Space Tenant Survey 2018.

Leasing activity by flexible space operators quadrupled from 2016 levels to about 3.5 million sq ft. in 2017. More than 80 percent of the leasing by flexible space operators was witnessed in the top three cities of Delhi-NCR, Bengaluru and Mumbai. Moreover, the share of flexible spaces as a part of total office absorption has also doubled from 5 percent in the first half of 2017 to about 10 percent in the first half of 2018.

“Originating as a shared service for start-ups, flexible spaces are now being utilised by established corporates as well to make their portfolios more agile amid a dynamic business environment. Given that the Indian flexible space market is one of the biggest across APAC, we anticipate that this segment will remain high on the investor radar as well. We expect that the leasing quantum of this segment would rise from about 5.4 million sq. ft. in 2018 to about 7-9 million sq ft by 2020. Commenting on the findings of the report,” says Anshuman Magazine, chairman, India and South-East Asia, CBRE.

In August 2018, CBRE India’s Research and A&T Occupier Group conducted interviews with leading flexible space tenants across the country to get their views on the overall experience of operating from flexible spaces. The survey covered both global and domestic tenants operating out of various flexible space formats such as co-working, business centers and hybrid spaces. The respondents belonged to a wide spectrum of industries; ranging from technology, banking, financial services, engineering, manufacturing to media and e-commerce.

Corporates in the consumer goods and technology sector more open to flexible spaces

The survey also indicated that respondents had varied responses towards working from flexible spaces, depending on the sectors they belonged to. For instance, BFSI corporates, under heavy regulations for data privacy/security, are currently in the early stages of incorporating agility in their office portfolios. Comparatively, corporates belonging to consumer goods and technology are at a more advanced stage as they are more open towards operating from flexible spaces.

Building on that trend, our survey also indicated that more than 60 percent of tech, media and e-commerce respondents gave access of flexible spaces to all management levels; as opposed to only 20 percent of BFSI respondents.

Despite additional charges for using services such as meeting rooms, more than half of the survey respondents reported a reduction in overall costs while operating from flexible spaces. However, as per market feedback, this holds true for only short-term leases. For tenants that want a long-term solution and have a sizeable workforce, traditional leases are still the financially viable option.

Almost half of the survey respondents also reported an increase in employee productivity after using flexible spaces.

Going ahead, about half of the respondents said they expect to allocate more than 10 percent of their portfolios to flexible spaces over the next two years.
First Published on Dec 14, 2018 10:58 am
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