On the back of the hybrid office space demand, expansion across cities and sustained funding, India’s flexible stock is expected to grow by 10-15% (y-o-y) from the current 36 mn sq ft in the next three years, CBRE South Asia Pvt. Ltd said in its report titled The Future is Flex.
The report highlights that as of Q1,2021, Bengaluru holds a flex stock of 11.6 mn sq ft which is the maximum in the country, followed by Delhi-NCR at 6.6 mn sq. ft and Hyderabad at 5.7 mn sq. ft. While these cities, along with Mumbai will continue to see further demand, flex demand in cities like 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 India.
Additionally, with an expanded range of flexible space options, and increased focus on hybrid working models by enterprise clients, Tier 2 and 3 markets are also expected to witness an increase in flex demand. Tier 2 activity is expected to be dominated mostly by domestic operators during the next couple of years, the report said.
Landlords may consider getting into ‘strategic’ partnerships with operators or creating their own brands to cater to the demand for flex spaces in their portfolio. To improve their product offering, landlords may want flexible spaces as part of their buildings along with an increased focus on ‘amenitization’ for F&B, living/convenience, meetings/events, and wellness.
Landlord partnerships or management agreements with operators may become more common in the post COVID-19 period/era. We may also witness portfolio tie-ups between landlord operators going forward. Landlords may strive to find the optimum share of flexible spaces as part of their portfolios with an eye on valuations.
“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 employee look forward to normal work days; with mass vaccination propelling further sectoral growth,” said Anshuman Magazine, chairman, India & South-East Asia, Middle East & Africa, CBRE.