Flex spaces in demand

Office working patterns have changed in the post-COVID era and commercial real estate players have taken note of the new reality

India’s flex space is expected to see major expansion in Tier-II cities in the coming years. According to a JLL-Awfis Report titled “Flex your Workplace”, 48% of respondents/occupiers who already have a presence in Tier-II cities want to further expand. Not just that, 78% of these occupiers are expected to expand within the next one year, with 84% wanting to utilise flex spaces. The story is almost similar for players who do not yet have a presence in Tier-II cities. Even among those who did not have a Tier-II city office footprint, 34% of companies had employees working from such locations. While 47% of the respondents had a presence in Tier-II cities, one-third of those were medium to large companies with employee strength of 3,000 or more. Increasingly, domestic tech firms who are targeting the interiors and cities/towns beyond the metros for business expansion opportunities are looking to create regional offices. Such growth plans will need flex operators as they will become the enablers for providing quality workspaces with quick turnaround time for such organisations.

“Times have changed, so have offices. Today’s offices are more flexible and can accommodate the changing needs of their employees. Going flex or hybrid is one way to ensure that talent stays. Through the pandemic, flex has remained resilient. Given the new realities, it’s now a crucial part of occupier real estate strategies. While 75% of the flex portfolio, on average, is still in Tier-I cities, the hybrid model is fostering growth of flex operators in Tier-II cities as well. We expect demand for flex spaces to continue to rise in the metros, and the Tier-II cities will witness tremendous growth. Driven by reverse migration, focus on talent across regions and cost of living, the Tier-II market is perfectly poised to witness a significant upswing in hybrid workplaces,” said Radha Dhir, CEO and Country Head, India, JLL.

Large enterprises have accounted for 50% of the demand for flex seats in the last couple of years. This demand driver will be key to the market’s continued growth as enterprises look towards portfolio optimisation due to changing employee needs which are driven by flexibility in work patterns. The average lease size has been in a steady range of between 52,000-56,000 sq. ft over the past four years. While leasing volumes tapered off in 2020 and 2021, enterprise-led flex deals ensured that transaction sizes remained within range. The average deal sizes for enterprise providers were 15-20% higher than the overall average.