Businesses to prop up flex workspace share in leased office space to 10-12% in 2023: Colliers

Despite businesses across the Asia Pacific region deferring decisions on office take up and investment, occupiers in India have been quick to adopt flex spaces attracted by their flexibility, agility and cost-effectiveness. Flex spaces are becoming an integral part of their office space planning, with this realty class expected to account for 10-12 per cent of the space they will occupy in 2023, up from 5-8 per cent before the pandemic in 2019, a new report by property consultancy Colliers revealed on Tuesday.

As of Q1 2023, India’s flex space penetration stands at 6.5 per cent and continues to expand, the report highlighted, adding other markets in the APAC region have seen “relatively slower growth” in the segment, with flex space share hovering around 2-4 per cent.

Grade A flex space leasing across India stood at 2.06 million square feet in the first quarter of 2023, with the Silicon Valley of India - Bengaluru - accounting for a 50 per cent of the space leased.

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“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,” said Peush Jain, who is the managing director for office services at the consultancy’s India arm.

“Post Covid-19 we saw a downward spiral in terms of demand for office space but then that is again getting back to normalcy where today
clients are willing to commit to signing up for office spaces on 2–5-year leases which lie on a sweet spot for coworking operators,” said Shesh Paplikar, CEO & co-founder of coworking space provider BHIVE.

Technology companies occupy a lion’s share at over 50 per cent of the total flex space across Chennai, Delhi-NCR, Pune and Hyderabad, as per industry experts. Other major sectors that are actively embracing the hybrid work model through flex workspaces include engineering & manufacturing and BFSI.

Managed and flexible office space provider Smartworks counts 46 per cent of its clientele from the technology sector whereas the share stands at 30 per cent for BHIVE Workspace.

Furthermore, tier II/III cities are witnessing heightened activity in the segment. Smartworks is eyeing Kochi and Coimbatore for its next leg of expansion, while BHIVE, which is currently present in Bengaluru, is exploring options in Mangaluru.