by THO
More than 80% office occupiers prefer to expand their commercial portfolio through flex spaces in the next few years. The growth in flex space endorsement is expected to be highest amongst multinational companies (MNCs), with an anticipated 3-4X times rise from current levels by 2030, according to a survey-based report by Colliers titled Flex Spaces: Reshaping the New-Age India Office Market.
As per the report, 60% occupiers are likely to have a flex share of 20% or more in their office portfolio over the course of next 3-5 years, up from the present 40%. Earlier, flex spaces were predominantly occupied by start-ups. However, over the next few years, more than two-thirds of real estate expansion across occupier segments will be through flex spaces.
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About 40% occupiers envisage flex spaces as centers of core business operations. As many as 77% occupiers prefer relatively longer lease periods of less than one year and around 45% occupiers prefer core areas of major cities for office portfolio expansion, the report showed.
Why are companies focusing on flexible office spaces?
With both cost arbitrage and enterprise-level offerings coming into play, occupiers are increasingly embracing flex spaces for their core business operations. About 45% and 35% of mid and large sized companies respectively are carrying out their core business operations in flex spaces. Notably, with increasing technology adeptness in flex spaces, about 40% of the technology sector occupiers are using flex spaces for core business operations.
The survey took into account inputs from start-ups, MNCs and GCCs targeting senior management personnel including key decision makers in the areas of real estate, administration, corporate strategy.
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“Over the next few years, more than two-thirds of real estate expansion across occupier segments will be through flex spaces. Notably, over 80% of the expansion in technology, engineering and manufacturing and healthcare sectors, would be through flex spaces,” said Arpit Mehrotra, Managing Director, Office services, Colliers India.
Flex spaces emerging as centres of core business operations
Flex spaces are now being repurposed and fulfilling roles beyond support centres.
“About three-fourths of the surveyed occupiers, including MNCs and large domestic occupiers, feel positively inclined for relatively longer commitment periods. Over the next few years, average commitment period for flex spaces can potentially reach close to three years, a significant increase from the typical lease agreements of less than a year in the pre-pandemic period. “said Vimal Nadar, Senior Director and Head of Research, Colliers India.
Core areas of major cities continue to be the preferred areas for portfolio expansion
While expanding, occupiers are likely to lean towards flex spaces with attractive offerings in central areas as compared to facilities in peripheral areas.
Going ahead, about 45% of surveyed occupiers would opt for future expansion through flex spaces in CBD/SBD locations of tier I or tier II cities, as per the report.
In terms of work-place strategy, flex spaces are likely to champion distributed work models. About half of the larger companies including Global Capability Centers (GCCs) and MNCs envisage flex spaces to act as both hub and spoke offices in the next few years.
