The total flexible space footprint touched 40 million sq ft in 2021-2022 and is expected to grow to nearly 75 million sq. ft by 2025, riding the wave of enterprise demand for managed workspaces, a joint report by Qdesq and JLL titled 'Indian Office market: Recalibrating with Flex' has said.
More than 90,200 flex seats were leased across the top seven cities by occupiers in FY 2021-22, which is a 2.5X growth Y-o-Y, indicating that demand for flex space has seen a resurgence over the past 12 months, driven by enterprises seeking to create a more agile real estate portfolio strategy in an evolving hybrid work environment, the report said.
The aggregate enquiries for flex space witnessed nearly a 2X Y-o-Y growth for FY 2021-22. This translated to over 214,000 flex seats spread over 15,000 unique leads as recorded by Qdesq across the major Tier I and II cities. In terms of space, with 1 flex seat equaling 70 sq. ft of leasable area on an average, it translates to nearly 15 million sq ft, said the joint report.
Qdesq tracks the unique leads and flex seat enquiries on its digital and offline platform. JLL tracks the actual flex seat transitions. Therefore, the data has been drawn after benchmarking leads and enquiries against actual transactions.
Bengaluru, Pune, and Delhi NCR together account for over 60 percent of the total flex seats leased in FY 2021-22. More than half of the total flex seats leased in FY 2021- 22 were in the form of significant-sized transactions of 300 or more seats. In absolute terms, Bengaluru saw around 25,000 flex seats leased, followed by Pune with around 15,000 over the same 12-month period, it said.
Delhi NCR also leads in terms of unique leads and total seat enquiries. The top four cities in terms of seat enquiries – Delhi NCR, Bengaluru, Chennai, and Mumbai, together account for about 74 percent of the leads and 72 percent of the seat enquiries, respectively. Bengaluru is the leading tech hub and along with Delhi-NCR forms the two major start-up clusters in the country and thus sees a significant demand also coming from big tech firms and well-funded unicorns.
As many as 62 percent of the seats transacted were taken up through the managed route, where the flex operator was curating the entire flex workspace as per the tenant’s needs. This outlines how flex is transforming as per the needs of the market from a pure co-working set-up to a more private office, managed space concept. Seat enquiries show a higher demand for private offices (43 percent) compared to co-working set-ups (39 percent), the report said.
Flex seat enquiries up 17 percent Y-o-Y in Tier-II cities
Start-ups, SMEs, and companies in the fintech and e-commerce segments focusing on emerging economic centres and smaller towns for business growth and enterprises looking to tap into the talent pool of an increasingly mobile workforce are the mainstays of the increase in enquiries for flex seats in Tier-II cities, the report said.
Also, the average deal size (number of seat enquiries/number of leads) has increased by around 27 percent - from an average of 11 seats in FY 2020-21 to an average of 14 seats in FY 2021-22.
“The flexibility to expand or contract on-demand, shorter lease tenures, fully serviced, amenity-rich offices and being able to create workspaces of the future which act as magnets for returning employees and in the war for talent are key factors fueling the flex market growth. An increasing number of enterprises are expanding their usage of flex space in tandem with transformational changes with respect to remote work, mobility, and flexibility. We expect the flex footprint to grow to nearly 75 million sq. ft by 2025 from the current 40 million sq ft levels, riding the wave of enterprise demand for managed workspaces,” said Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.
Enterprises from tech and start-up ecosystems driving actual seat take-up
Flex industry has grown drastically in popularity and adoption among Indian corporates of all sizes and scale, over the last few years. All forms of flex – co-working, private managed office, and Hybrid on demand usage, are experiencing robust demand. Having said that, co-working stands out as the best fit and solution for sub 100 seats requirement which is 90 percent of the market, said Paras Arora, founder and CEO of Qdesq."Enterprises have been re-evaluating the office strategy and return to work equations. All the cues leading to a phenomenon of employee-centric and productivity-driven office strategy. Furthermore, the things which are constantly being validated are flexibility, agility and decentralization,” he said.