The survey pointed out that 56% of the respondents intended to have more than 10% of the total office portfolio as flexible spaces by 2025
New Delhi, NFAPost: As return to office plans get ramped up across India, flexbile office spaces has become the preferred choice for employers, and at least 47 per cent of corporates are planning to increase the use of such spaces in the next one year, revealed a survey conducted by real estate consultancy firm CBRE.
The flexible office space includes coworking, enterprise coworking, business centres, and managed office spaces. It has shared and dedicated office spaces that involve various degrees of customization for occupiers. This office space refers to space leased by flexible space operators.
Occupiers are striving to find the middle ground between supporting flexibility and ensuring predictable occupancies to utilize their space optimally. As a result, increasing use of flexible office space is emerging as the top short-term real estate portfolio strategy.
At least 47% of respondents indicated increased use of flexible office space over the next 12 months. The survey further pointed out that 56 per cent of the respondents intended to have more than 10% of the total office portfolio as flexible spaces by 2025, indicating that flexible spaces will continue to be a key component of occupiers’ portfolios.
Even the ‘Global Occupier Outlook 2023’ report by Colliers released earlier this month, revealed that flexible workspaces now account for 10-12% of their real estate portfolio compared to 5-8% pre-COVID pandemic.
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.
WeWork India, Smartworks, Simpliwork Offices, Awfis, Skootr, The Executive Centre, Urban Vault, IndiQube, 91Springboard, 315Work Avenue, Akasa Coworking, The Office Pass, Avanta India, and BHIVE Workspace are major players that provide co-working/managed office space.
“The increased focus on Return-to-Office (RTO) plans by occupiers, driven by factors such as work-from-home (WFH) fatigue, attrition, and moonlighting, has resulted in a gradual upswing in office occupancies since the second half of 2022, majorly across sectors including BFSI, engineering & manufacturing, life sciences, e-commerce, media & marketing. Our latest survey findings point out that nearly one-third of the respondents reported a utilization rate of more than 75%,” said Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India.
Around 37% of respondents indicated increasing consolidation to fewer locations. This trend reflects the growing emphasis on streamlining operations and maximizing resource utilization. The survey found that there is growing interest in tier-II cities due to skilled talent pools and improving infrastructure and 13 per cent of the respondents chose to relocate some functions to tier-II cities in Q1 2023 as compared to 8% in December 2021.
“Formulating hybrid working rules and policies that balance business goals with workforce needs would be at the top of occupiers’ agendas. To address the challenges faced by new hires in terms of onboarding, collaboration, cultural integration and visibility, occupiers are likely to assign them to a fixed physical office location. This approach was supported by 65% of the respondents,” said the report.
Remote hiring is expected to focus on a combination of work-from-home (WFH) and satellite offices, enabling new employees to periodically visit the office to connect with colleagues and become acquainted with the company’s practices and culture. This hybrid approach was favoured by 35% of the respondents.
Occupiers prioritised strategies such as integrating employee wellbeing into workplace and workforce strategies (74% respondents), granting greater flexibility through organizational policy changes (70% respondents), engaging all stakeholders to redefine office purposes and designs (60% respondents), and equipping people managers for managing hybrid teams through coaching and upskilling (56 per cent respondents).
“Demand for flexible space has gone up significantly in the last 3-4 years. Before the pandemic, the demand was secular and contributed by all kinds of clients ranging from individuals to startups to large corporates. However, the demand during the pandemic and post-second wave is dominated by mid-sized and large enterprises that seek to cut their capex and get rid of the hassles of managing the workspace. Co-working/managed office operators also provide them the flexibility to scale up and scale down their operations across various geographies,” said Amal Mishra, Co-founder, Urban Vault, a Bengaluru based managed co-working space provider.
In terms of office portfolios, occupiers will continue to expand into flexible office spaces. Eighty seven per cent of respondents expect to either maintain or increase the percentage of flexible spaces in their portfolios over the next two years.
In Q1 2023, the majority of respondents (96 per cent) preferred working in the office for at least three days per week, which aligned with the findings of the July 2022 survey (91%). However, there has been a significant rise in the inclination towards fully office-based strategies, as 40 per cent of respondents opted for this approach in Q1 2023, compared to just 18 per cent in July 2022.
Occupiers are expected to limit hybrid working to a portion of their workforce, as revealed by 73% of the respondents who indicated that less than half of their staff would be granted the option. Among the respondents, around 30% stated that hybrid working would be available to 25-50% of their employees.
