The growing popularity of flexible office spaces
The article has been authored by Neetish Sarda, founder, Smartworks.
High-rise office buildings, swank interiors, play-cum-collaboration spaces, and a pleasant work environment create an exciting work culture. These play a vital role in attracting and retaining talent by providing people with a place to ideate, brainstorm with teams, and develop innovative solutions.
These were, however, limited to big enterprises that lease large spaces for thousands of employees in big tech parks or special economic zones, owing to the high costs associated with it. But the rise in popularity of managed or flex spaces has democratised office spaces in India. Today, employees of all business sizes can work out of premium managed office spaces with amenities ranging from tech services to stocked kitchens in a campus-like environment while being in central business districts of big cities at a fraction of the cost. This enables companies to reduce their capital expenditure on infrastructure while increasing employees' productivity.
According to a global property consultant, the flexible office segment continued to find the occupier's favour and constituted 21% of the transacted space (1.24 million square feet) during the first quarter of 2022. This is almost double the space transacted during Q1 2021, which stood at 11%, with cities such as Bengaluru, Hyderabad, and Pune leading the demand growth. Flex space operators were particularly active in Bengaluru as the city accounted for a substantial 43% of the total space transacted by the sector.
The pandemic induced new work strategies, and hybrid arrangements have significantly accelerated the rising demand for flex spaces. Managed office spaces have become mainstream for occupiers; it will be a significant component of office portfolio strategies as we advance. While unicorns turned to flexible workspaces to manage costs, large enterprises are opening headquarters and satellite offices to enable employees working remotely to access office facilities as and when required.
The booming start-up culture in the country has also played a key role in enhancing the presence of managed working spaces in India, with youngsters building innovative solutions to solve specific problem statements while generating value for society and generating large-scale employment. The Stand Up India initiative by the Government of India, along with the proliferation of start-up incubators and accelerators in the country, and keen investor interest, is further contributing to the growth of new-age businesses, ranking India as 20th among the top 100 countries in the 2021 Global Start-up Ecosystem Index by Start-up Blink.
Managed space providers are best suited to cater to varied and evolving business requirements. Companies are looking for one single operator to take care of their workspace needs across cities to ensure quality and a standardised office experience. Their flexible offerings in office space uptake and value-added services allow companies to expand and consolidate depending on their business growth.
The modern workforce has high expectations from their office spaces, and companies are moving to flex spaces that are tech-enabled and offer top-notch amenities and value-added services. While standard services include office space, high-speed internet, and basic amenities, increased demand has introduced digital workspace solutions, legal and accounting services, creche, concierge services, and industry-leading partnerships. This popularity and efficacy of managed office spaces have also helped expand their base, leading to the proliferation of local players and penetrating Tier 2 and 3 cities.
According to a report, the flex workspace stock is expected to cross 60 million square feet in metro and non-metro cities by 2023, as occupiers embrace agility and flexibility in their work models. Here, while metros continue to remain the stronghold of flex spaces, tier 2 and beyond cities are gradually gaining ground, with remote work becoming commonplace.
As companies focus on the fluidity of the workforce establishing hub-and-spoke models and increased flexibility of deal structures, the role of managed space providers in the future will become even more crucial- making India one of the largest and fastest-growing managed office space regions in the world.