In a sign that more occupiers now prefer to lease flexible offices, these spaces have reported their highest-ever share in overall office leasing volume in the first six months of 2024, a report released on Monday showed. Compared to 10.2 per cent in 2019, their share in total office leasing has gone up to 12.7 per cent between January and June this year.
The absorption of flex spaces by companies, both domestic and foreign, has been on a consistent rise since the Covid-19 pandemic hit. From 85,234 seats taken up across the top eight Indian cities in 2021, the number has significantly risen to 155,000 seats in 2023.
In the first six months of 2024 alone, 106,554 seats have been taken up, according to a report by real estate consultancy Cushman & Wakefield, in collaboration with managed workspace operator Table Space. It was titled “From Flex to Managed – Evolution of the Flex Space Industry”.
The biggest occupier of this type of workspace is Information Technology (business process management), accounting for 50 per cent of the total absorption this year. It is followed by engineering and manufacturing at 18 per cent and banking, financial services and insurance (BFSI) at 12 per cent.
During the Covid-19 pandemic, companies gave up part of their conventional office spaces due to less demand. After the pandemic, factors like high costs and working from home led to these companies opting for flexible offices.
These places also offer attractive space for freelancers, startups, and small businesses.
In a release last month, Crisil said that flex offices are more in demand due to their customisable workspace offerings and relatively flexible lease terms.
“Ongoing factors like talent access, flexible costs, risk-mitigated portfolios, and heightened business focus are pivotal drivers,” said Sameer Singh, chief operating officer of another flex office operator, 91Springboard.
In the report on Monday, Cushman & Wakefield said that the supply of flex offices has also become strong. In the last five years, the total footprint of flex space operators in India has doubled.
In 2022 and 2023, the annual growth rates in the footprint of these spaces were 23 per cent and 18 per cent, respectively, the sharpest rise seen in history.
Several flex space operators have recently announced their expansion plans. For example, IndiQube and WeWork India both plan to add 1.5 million sq ft of flex space in 2024-25. Another operator, 315Work Avenue, plans to double its portfolio to 4 million sq ft in 18 months.
“With the first half of 2024 already accounting for 70 per cent of last year’s total flex-space demand, we anticipate a potential record-breaking year for flex seat leasing,” said Ramita Arora, managing director, Bengaluru and head of flex, India, Cushman & Wakefield.
First Published: Sep 02 2024 | 6:34 PM IST