Colliers forecasts flex workspace stock to cross 60 million sq ft in metro and non-metro cities by 2023, as occupiers embrace agility and flexibility in their work models, mentioned in a recent release by Colliers and Qdesq.
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% of the total flex stock as of Q3 2021, mentioned in the report.
“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%, with the trend moving towards pre-pandemic levels. 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,” said Ramesh Nair, CEO (India) and MD (Market Development-Asia), Colliers.
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%, 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.
Flex space is also emerging in non-metro cities as large enterprises are moving to a decentralised structure focusing on the 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% increase from current levels.
Major non-metros like Ahmedabad, Coimbatore, Indore, Jaipur, Kochi and Lucknow are witnessing robust activity and are the top 6 emerging non-metro flex locations.
Occupancy levels inching towards pre pandemic levels:
After a dip in occupancy and prices during covid, flex space is reviving in the latter part of 2021 with an average occupancy of 71%. Prices per seat have also seen an improvement by 21% as of September 2021, after falling by about 30% 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,” says Vimal Nadar, Senior Director and Head of Research, Colliers India.
Colliers recommends flex space operators to focus on enhancing occupier experience by digitizing workspaces and providing add-on services, which shall receive more enquiries. As occupiers focus on health and wellness, demand for well managed Grade-A properties with superior infrastructure is ought to increase. Inclusion of digital infrastructure and smart facilities shall also contribute in achieving greater operational efficiency, reduce energy consumption and higher customer retention.
