Office rules are changing in shared space: companies warm up in flexible workspaces
Since office rules are in flux, there is a renewed demand for co-workers, with all models running simultaneously in most places. Flexible lease formality, cost-effectiveness, agility and customized workspace solutions, and the need to expand to different locations at affordable operational costs for companies are all reasons for this advantage.
Although the first quarter of 2022 saw a strong recovery in the office market across India, the existing uncertainty has led occupiers to be wary of long-term leases and look for flexible options. “Leasing activity in the Indian office market remains at 50% of its pre-covid peak, with enterprise leasing in flex spaces already reaching 80% pre-epidemic levels, indicating how demand from occupants is being rebuilt by their cost optimization and flexibility requirements. Karan Singh Sodhi, Regional Managing Director, Mumbai & Ahmedabad, India, JLL.
The flexible workspace model is expected to make up 30% of the overall office sector by 2030, said Harsh Lamba, Country Manager India and Vice-President Sales – South Asia, IWG, a shared office service provider.
The top seven cities – Bangalore, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune have more than 1,200 operational operating centers and 56%, according to Flex Market Overview, published in a recent Flex Your Workplace study by JLL and Awfis. The centers are in Bangalore and Delhi-NCR. More than 90,000 seats have been leased in the last two years, accounting for about 51% of enterprise activity in the Bangalore and Mumbai Flex space.
Although demand for metros is expected to increase, second tier cities will be the next growth frontier. In the Co-working Space Office, the demand for seats has increased 5 times compared to the pre-epidemic level. Following the epidemic, 60% of Tier I seat occupants (corporate employees) have moved to emerging metros like Nagpur, Bhubaneswar, Indore, Jaipur, Coimbatore, Ahmedabad, Kochi, Chandigarh etc. Using the same data, Awfis has expanded its footprint in the interior where ITE, BFSI, Unicorn and Sunicorn are able to provide their employees with a professional work environment.
“If the shared space industry occupied 25 million square feet of commercial real estate in India, today it has reached close to 55 million square feet. Reverse migration, distributed workforce, remote work and work near home have changed the way Indians work, ”said Amit Ramani, CEO and founder of Office, which has offices in 14 cities and around 1,800 corporate partnerships.
Similarly, WeWork India has 36 locations across six major cities. Currently, companies like Colliers India, TATA Play Broadband, Netflix, Lenscart, Fab Hotel and 3M have 70% of WeWork India desk use enterprises, with the remaining 30% consisting of startups, freelancers and SMEs. “We want to expand our portfolio by 1 million square feet by 2022, with more than 50% of planned development initiatives previously committed,” said Karan Virwani, CEO, WeWork India.
“Currently, shared offices occupy less than 5% of the total office space in India. This portion will gradually increase the share of total office leasing pie in India by an inch. According to the Economic Survey, India’s fastest growing start-up ecosystem now has more than 61,400 recognized start-ups as of January 2022. During the epidemic, clients of large enterprises who traditionally lease large offices have relocated to shared offices, ”said Gagan Randev, Executive Director, India Sotheby’s International Realty.
Many occupiers are also expanding their offices in new geographical areas to stay close to their workforce. Co-working and managed service space operators are the best choice for such companies as they provide a hassle-free experience. “The high demand from technology givers and indigenous start-ups has reduced the level of emptiness across India in the last few months to get ready for space. Start-ups prefer to work from these locations to focus on their core business activities, and the hybrid work models offer the flexibility to experiment with a variety of seating configurations that are difficult to do in a traditional office setup. Even homeowners are looking to increase the share of Flex in their portfolio to attract new occupants to their portfolio and support the growth of their existing clients, ”said Arpit Mehrotra, Managing Director, Office Services, South India, Colliers, a diversified professional services and investment management.
During Kovid, commercial property rents in many macro markets were revised up to 25%. “Today, a company can save 18 to 24% on office operational costs by simply moving from a traditional lease to co-working. These savings are the main drivers of post-epidemic co-worker growth, ”said Aditya Verma, CEO, Office Pass, which operates locations in Gurugram, Noida and Delhi.
Fellowships is also a new revenue stream for hospitality brands, such as Accor’s ibis feature that work @ ibis offers. “As new companies set up bases in India, the shared space model will continue to grow, especially among companies at their incubation stage,” said Puneet Dhawan, Senior VP, Operations, Acre India and South Asia.
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