In the wake of the COVID-19 pandemic, the office space landscape in India has seen a significant transformation. The shift has impacted how offices operate, sparked innovative ideas in modern office space designs, and pushed organisations to rethink traditional office setups and shift to more agile and dynamic work environments.
Among various changes, a key trend post-COVID has been the surge in flexible office arrangements, with larger office spaces being fragmented into smaller spaces. The trend has emerged as a mainstay of modern work culture, leading to diverse working styles and has introduced flexibility into the office real estate market.
The rise of hybrid work models, capital intelligence, demand for flexibility in leases, and a shift in work culture have all fuelled the transition towards flexible spaces. From start-ups to small, medium-sized enterprises (SMEs) and large corporations, the demand for flexible strategies has grown.
According to a recent report by the CBRE India Research on India’s Office & Flex Outlook 2024, India remains the fastest-growing flexible office market in the world with a total stock of about 68 million sq. ft. The report also shows that Tier-II cities are emerging as the next frontier for flexible spaces as these cities strive to meet the evolving needs of business.
The report further highlights the active integration of flexible spaces into office portfolios under the ‘Core+Flex’ strategies, with managed offices and enterprise co-working requirements witnessing particularly high demand. (Core+Flex’ strategy allows occupiers to be more financially efficient, while still providing employees with a consistent experience and company culture along with the flexibility to work from different locations)
The report, which surveyed the top nine cities in India—Delhi-NCR, Mumbai, Bangalore, Chennai, Hyderabad, Pune, Kolkata, Kochi, and Ahmedabad—shows a consistent increase in the leasing demand from flexible operators and the share of flexible spaces in overall leasing between 2018 and 2023, albeit with minor dips in 2020 and 2021. It states that more than 2,00,000 workstations were leased by occupier clients in flexible spaces in the year 2023 and flexible space stock stands near 64 million sq. ft., with more than half of the stock in Bengaluru and Delhi-NCR in 2023, with a potential to reach 80 million sq. ft. in 2024.
Traffic fuels trend
Sanjay Chugh, City Head and Director of Anarock Property Consultants Pvt. Ltd., says that an important element fuelling the demand for flexible office spaces in India post-COVID is the employees’ growing frustration with worsening traffic congestion.
Urban hubs in India, particularly Mumbai, Delhi, and Bangalore, are notorious for their traffic jams, resulting in considerable time wastage for commuters. The daily commute to the office has become a major source of stress and inefficiency for employees, with some spending up to two hours or more navigating through congested roads and crowded public transport systems. This prolonged commute not only adds to the physical and mental strain of individuals but also impacts productivity and work-life balance.
Mr. Chugh notes that the rise of remotes and hybrid work culture has contributed to the rise in flexible office spaces, with nearly 70% of the companies adopting hybrid work models that allow individuals to forgo the drudgery of daily commuting.
Improved public infrastructure
Meanwhile, enhanced public infrastructure is another factor that has contributed to the increase in flexible office spaces. Areas which were once considered underdeveloped, have now transformed into bustling hubs with new malls and amenities. This transformation, Mr. Chugh says, has reduced the need for long commutes to central areas leading to the rise of co-working spaces in more accessible locations.
He claims that the shift towards flexible leasing models has further accelerated the widespread adoption of co-working spaces. “The increased popularity of co-working spaces, previously known as business centres, has transformed the atmosphere of shared working spaces from formal to lively and colourful, catering especially to the growing generation-Z workforce”. He adds, “These spaces, apart from being less formal, also offer an opportunity for networking and collaboration among diverse businesses and professionals sharing the same workspaces.”
According to a report on New Age Flex Workspace by myHQ by Anarock, funding in the co-working sector has been promising, with a 3.3 times influx of funding post-COVID era in comparison to the pre-COVID period (₹1,400 crore to ₹4,600 crore). Additionally, three out of four people believe that demand for co-working spaces will be better than demand for large office spaces by 2030. Also, 85% of co-working operators have seen an increased demand in the last five years.
Cost optimisation
Flexible office arrangements, such as co-working spaces, also have the advantage of allowing businesses to optimise costs by paying for space and services based on actual usage. They typically offer shorter lease terms compared to traditional office leases. This flexibility allows businesses to scale up or down more easily based on their changing needs, without being locked into long-term contracts that may not align with their evolving requirements.
“Even though the costs to the clients are similar in leasing traditional office space and coworking space, the difference comes in huge upfront capital investment required for traditional office space which is needed for interiors,” says Utkarsh Kawatra, Co-Founder and CEO, myHQ by Anarock.
The myHQ report also says, “While cost optimisation is the prime reason for many corporates preferring co-working spaces, there are also a significant number of start-ups which use such spaces more innovatively. Companies in their infancy, with low budgets and ambitious plans, are seen registering at co-working places for the registration of their companies and fulfil the statutory requirements like GST registration.”
Mr. Chugh says, looking ahead, the future of office spaces in India is likely to be characterised by continued innovation, flexibility, and adaptability. As organisations embrace remote and hybrid work models, the demand for flexible offices is expected to grow further. This trend presents opportunities for real estate developers, operators, and businesses to collaborate and create innovative workspace solutions that meet the evolving needs of the workforce.
