In November last year, payment service company Exceleron Software gave up its office of eight years in a commercial building at J.P. Nagar by just letting the lease agreement die a natural death. It now calls a smaller space its office, having signed a lower flexible lease term with ClayWorks, a flexible workspace provider.
Pradnya Chebi, Head, Exceleron, points out that this way, the company has made sure it does not pay for a space that would lie painfully underutilised. The company's 30-plus staff has not set foot in the office since the pandemic, and would likely continue working from home for a few more months.
Similarly, services provider Education First now operates from Awfis’ co-working space on Residency Road, in a three-year contract for 150 seats. The company has a 300-member workforce, which had a huge office in Halasuru until recently.
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“We intended to optimise operation cost,” says Harish Subramanian, Admin and Procurement Manager, Education First. As of now, the company has extended WFH to its workforce till March 2021.
“Even if the office reopens, people would still be working from the co-working space on a rotational basis,” says Harish.
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A recent report by real estate services firm Jones Lang LaSalle (JLL) titled ‘Reimagine Flexspaces A 360⁰ view’ predicts that Indian flex space market would be catapulted to a 50 million sq.ft. industry in 2023. The market is expected to grow by around 20% per annum over the next three-to-four years, although this trajectory will not be linear, says the report.
Bengaluru and Delhi NCR together would account for more than 50% of India’s flexi stock, the report adds.
Experts say that as corporates return to the workplace, they are likely to further leverage flexible space to reduce capital expenditure.
“The flexi space market is made attractive by manoeuvrability it offers clients, in terms of lease terms, customisation and amenities,” says Arpit Mehrotra, Managing Director, Office Services (South India), Colliers International.
For example, if the average lease period in a Grade-B building is 10 to 12 months, flexi space providers may offer the client the same option for a duration of six months.
“Larger the term of the contract in a flexi space, you can negotiate the price too,” says Arpit. Also, to achieve de-densification, moving to a new space could be more economical than investing on capex.
Managed spaces
Rahul Singh, co-founder and director, ClayWorks, says the pandemic has underlined the value of “neighbourhood workspaces” in sparing employees needlessly long commutes.
He illustrates how a major IT company with a centralised facility approached them with a requirement for small workspaces in different pockets of Bengaluru.
He adds that much of this demand comes from the Central Business District (CBD), and areas such as J.P. Nagar, Jayanagar and Bannerghatta Road.
He draws attention to another trend, one where companies with large floor areas sublet their office space, converting them into a shared space.