May 30, 2023: Colliers today released its latest report ‘Global Occupier Outlook 2023’, which highlights the key takeaways and insights on the evolving global workplace. According to this report, the share of flex spaces in Indian occupiers’ total portfolio has increased to 10-12% in 2023, from 5-8% before the pandemic in 2019. As of Q1 2023, India’s flex space penetration stands at 6.5% and continues to expand. Other markets in the APAC region have seen relatively slower growth in flex space, with flex space penetration hovering around 2-4%.
Going forward, flex spaces will continue to see strong growth, as they continue to support occupiers in realigning their portfolios and space considerations to suit a hybrid working style while leveraging technology and sustainability to improve efficiency and employee experience, says the report.
| Trends in flex space leasing in India | |
| Year | Gross leasing |
| 2019 | 6.7 msf |
| 2020 | 2.2 msf |
| 2021 | 4.8 msf |
| 2022 | 7 msf |
| Q1 2023 | 0.2 msf |
| City-wise flex space leasing in Q1 2023 | ||
| City | Flex space leasing | Share in total flex leasing |
| Bengaluru | 1.02 msf | 50% |
| Chennai | 0.17 msf | 8% |
| Delhi NCR | 0.63 msf | 31% |
| Hyderabad | 0.04 msf | 2% |
| Mumbai | 0.02 msf | 1% |
| Pune | 0.18 msf | 8% |
| Pan India | 2.06 msf | |
Peush Jain, managing director, office services, India, Colliers, said, “Flex spaces have emerged as a core strategy for occupiers to adopt a decentralised workspace model, serving as a promising alternative to the traditional paradigm. As compared to shorter lease tenures of 1-2 years pre-pandemic, occupiers are now going for longer commitments of 3-5 years with flex space operators as they look to integrate flex space as a long-term solution. During 2022, leasing by flex space operators touched 7 million square foot (msf) across top six cities, highest in any year. This was a 46% YoY increase led by prominent IT hubs such as Bangalore and Pune.”
The technology occupiers have been one of the driving forces of rising flex space demand across the top cities, says the report. Tech companies currently occupy over 50% of the total flex space across Chennai, Delhi-NCR, Pune and Hyderabad. Other major sectors that are actively embracing hybrid working through flex include engineering and manufacturing and BFSI. In larger markets such as Mumbai and Bangalore, demand by BFSI and engineering companies for flex space is almost at par with technology occupiers. The report predicts that the demand from technology occupiers will continue to remain strong in the next two years.
Across industries, several organisations are looking forward to pivoting to some form of a hybrid model for the foreseeable future. The hybrid working model has spurred demand for flex spaces across peripheral locations and non-metro cities. Non-metro cities such as Ahmedabad, Coimbatore, Indore, Jaipur, Kochi and Lucknow are witnessing heightened activity in flex spaces. This trend is prominent amongst technology, consulting and e-commerce companies who are establishing multiple satellite offices in these locations.
Green buildings are garnering significant interest from occupiers as optimal energy usage and automated services remain key focus areas. During 2022, about 81% of the new office supply across the top six cities was green certified. According to the report, going forward, demand for green certified buildings will continue to rise.
Since over 65% of workers are seeking more in-person time with their teams, companies across the globe are investing in green design, tech-enabled features and wellbeing amenities, among others. A number of industries including tech, ecommerce, 3PL, consulting and manufacturing have witnessed rapid growth over the past few quarters and are the demand drivers for office assets across the country, says the report.
Sam Harvey-Jones, chief operating officer, Asia Pacific, Colliers, said, “The APAC region is undergoing a significant transformation in the way workspaces are perceived and utilised. While challenges persist, this period of change presents unprecedented opportunities to reimagine the role of space and explore new approaches that cater to evolving employee needs. The research finds APAC occupiers are shifting from an ‘inward’ business view of what’s important in an office or location, to an ‘external’ view of what locations gives their employees access to in terms of culture, lifestyle and wellness.”
