Report Suggests that Flexible Space Leasing Reached All Time High Of 10.8 million Sq. Ft in 2019

Flexible workspace leasing in 2019 touched an all-time high of 10.8 million sq ft, up 26% from a year ago led by technology adoption, increased occupancy rates and growing investments. Among the key markets, Bangalore and Hyderabad accounted for about half of the flexible space take-up in India.

The overall stock in flexible space market saw a historic increase of about 60% from around 19 million sq ft in 2018 to touch 30 million sq ft in 2019. The flexible space stock was mainly dominated by Bangalore, followed by Delhi-NCR and Mumbai, showed a CBRE South Asia report.

The uptake in the flexible space leasing in 2019 was dominated by hybrid spaces and managed space (77%) followed by co-working and business centers (23%).

“In today’s dynamic & technology-driven business environment, corporates are beginning to explore various workplace solutions which could result in capex reduction and increased agility of their real estate portfolio in the sector. Given the overall performance of the sector, we expect the demand to remain steady with an overall stock of flexible space anticipated to cross 40 million sq ft by the end of 2020,” said Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE.

Many operators have been adopting specific apps that provide intergroup social platforms where occupiers can post business requirements. An innovative example of such tech incorporation is of a managed space operator that was planning to introduce robotics across its centers in the coming quarters.

Increased occupancy rate was primarily a result of established corporates leasing large-sized spaces in both hybrid and managed spaces. Rising inflow of funds into this segment was witnessed in 2019, with about $140 million of funding provided by angel investors, private equity and debt funds.“Going forward, the overall share of office space leasing is expected to increase from about 14% in the 2019 to 16-20% in 2020 and touch about 10-12 million sq ft. Besides leasing space in the top three cities, operators are expected to expand in Hyderabad, Pune and Chennai in 2020,” said Ram Chandnani, Managing Director, Advisory and Transaction Services India, CBRE South Asia.

The model of engagement and partnership between landlords, occupiers and flex operators would continue to evolve in 2020, as landlords create their own flexible space brands or partner with experienced operators, the report added.