I’ve got a theory: If you love your workspace, you’ll love your work a little more. - Cynthia Rowley
Cynthia Rowley is an American fashion designer who once highlighted the significance of operating in a sound and productive work environment. Her theory fits the present scenario as many large and established corporates are now looking forward to shifting from traditional to flexible workspaces. The demand for fully furnished offices powered by top-notch amenities and services has gained momentum in recent years. Work-from-home fatigue, higher attrition rate, and moonlighting have been some of the most concerning factors that led occupiers to set up RTO (Return to Office) strategies. Since the second half of 2022, many companies have raised concerns about these influential components which is why they’re actively looking for flexible workplace solutions.
A report by CBRE pointed out that 56% of respondents are planning to have more than 10% of the total office portfolio as flexible spaces by 2025. This indicates that the demand for flexible and managed workspaces will continue to dominate the office space segment in the longer run. The same report disclosed that at least 47% of corporates are planning to increase the use of flexi spaces in the next year. As the blog progresses, we are going to present facts to demonstrate how quickly the entire office segment has shifted in favour of flexible and managed settings.
The Unprecedented Rise of Flexible Workspaces
The exponential rise in office leasing activity across different regions in India proves the sheer dominance of managed workspaces. An increase in RTO, hybrid model, and satellite offices have been observed in several sectors and domiciles, leading to a surge in commercial space leasing. Recently, JLL released a detailed co-branded report with Smartworks which highlighted the transformative growth of flex and managed workspaces in India. Below are some of the key elements of that report:
According to the report, 53 million square feet of total operational flex stock is shared among the top seven cities, including Delhi-NCR, Bengaluru, Chennai, Pune, and Hyderabad.
Currently, there are a total of 8,39,250 operational flex seats in India.
Bengaluru, Hyderabad, and Delhi-NCR have a 68% share in operational flex stock.
If we compare FY 2021 to FY 2023, there’s a remarkable 3.2X growth in enterprise flex leasing.
The thriving startup culture in India has shown promising results with an exceptional 10X growth in flex seats leasing recorded between FY 2021 to FY 2023.
Almost 90% of respondents indicate a preference for flex in any form; large corporates are looking forward to utilising more custom flex spaces.
The rising sway of flexible and managed office spaces demonstrates that the Indian commercial segment is evolving rapidly and will continue to expand in the future. Moving ahead, we will highlight some sectors, cities, and workplace concepts that are further empowering the growth of flex spaces in India.
Engineering & Manufacturing Sectors Witnessed a Three-Fold Rise in Grade-A Gross Absorption
The IT sector has long dominated the campaign for flex space leasing operations, not only in Bangalore but in other prominent cities as well. Currently, engineering and manufacturing, BFSI, edtech, fintech, e-commerce, and many other sectors are showing interest in leasing shared office spaces. According to a report by Colliers, Engineering & Manufacturing firms have witnessed a three-fold rise in Grade-A gross absorption.
The second quarter of 2023 witnessed a significant surge of 21%, compared to 7% in the second quarter of 2022. Apart from Engineering & Manufacturing, Flex Spaces, BFSI, and Healthcare & Pharma are showing the intent to shift from conventional spaces to fully furnished managed offices.
Battle of the IT Hubs: Hyderabad Beats Bangalore in FY 2023's for New Office Supply Stakes
A renowned property consultant platform revealed that Hyderabad has emerged as a prominent rival for other metropolises. Hyderabad surpassed Bangalore with approximately 14.94 million square feet for new office supply in 2023, accounting for a total of 31% share of the total supply among the top 7 cities. On the other hand, the thriving job market in Hyderabad continues to remain strong. With large MNCs and domestic corporates leasing office spaces in the City of Pearls, better work opportunities are sure to come.
Rise of Tier-2 Cities for Managed and Flexible Workspaces
Companies are now looking for shared office spaces in Tier-2 cities with the aim of reducing costs, maintaining proximity, maximising opportunities, minimising attrition rates, and ultimately expanding the business model. Cities like Jaipur, Ahmedabad, Indore, and Coimbatore have emerged as the top hotspots across different industries. Hence, the need for flexible workspaces in Tier-2 cities is increasing day by day as authorities are taking effective measures to enhance the business ecosystem.
More Focus on Employee Experience and ESG Compliances for a Better Tomorrow
Since the majority of today’s workforce belongs to either Millennials or Gen Zs, companies are putting greater efforts to attract and retain the best talents. With concepts like hybrid working, hot desking, and touchless solutions, corporates are elevating the office experience by moving into flexible office spaces. On the other hand, businesses are also considering ESG as another major concern. ESG stands for Environmental, Social, and Governance initiatives that address influential elements and take corrective measures to neutralise the threats.
The need to consider and initiate sustainable solutions is now more than ever. Not just the authorities but even the investors, customers, and employees are demanding businesses to take responsibility and enhance their social and environmental footprint.
The escalating impact of managed and flexible workspaces within the Indian commercial sector serves as a testament to its brisking evolution. This transformation shows no signs of slowing down as agility and innovation have become the core strategies for businesses. As we gaze into the future, it becomes clear that the trajectory of flexible workspaces will continue to rise. Furthermore, innovative workplace concepts and continuous tech enhancements will keep reshaping the office segment.