India's office market: Recalibrating with flex

Flex seat transactions up by 2.5X Y-o-Y for FY 2021-22: JLL-Qdesq Report

June 20, 2022
  • Samantak Das
  • Rohan Sharma

The dynamics of India’s office space market are undergoing a period of transformation. While occupiers focus on creating new-age workplaces in a bid to retain talent and foster a culture of innovation and collaboration, flexibility has emerged as a key requisite. As office portfolios are reworked for agility, the flex market is witnessing a rapid rate of acceptance among mainstream occupiers. The advantages of capex savings are now incidental to making their portfolios flexible, with on-demand and quick turnaround of modern workspaces fast becoming essential in a hybrid and hub-spoke work environment.

As the workforce becomes rather mobile and organizations look at creating workspaces which are amenity-rich, safer and facilitate collisional-collaborative work ethos, flex spaces are primed to fulfil such needs. In fact, hassle-free operations that enable corporates to focus on their core business activity, experimental seating arrangements, hospitality-like characteristics and flexibility in lease tenures are creating an exceedingly fertile ground for the flex segment.

While bigger operators are catering to large enterprise needs for managed offices, SMEs and start-ups are driving the demand for smaller coworking-styled set-ups to thrive across the metros and tier 2 cities. In fact, most operators are straddling both worlds of customized enterprise solutions as well as standard flex solutions to cater to the expanding occupier base. Occupancy levels have shown an upward trend in flex centres which is an indicator of rising return to work percentages and larger flex adoption.

The changing commercial market landscape will continue to be defined by an ever-increasing presence of flex which, in addition to being accessory to the total demand for office space, will play a big role in defining the role of workplace and creating future-ready workspaces.

Demand for flex has seen an upward trend as occupier portfolio strategies and workplace transformation trends have been reworked in a post-pandemic world. While there is no single source to comprehensively track the enquiries for flex, we have utilised the leads and enquiries data collected through an online platform and offline route by Qdesq, as a subject case to observe the on-ground trend on flex space enquiries. This enquiries data is largely reflective of demand for coworking-type facilities by small and medium firms but is a good indicator of how overall demand for such flex options is on the rise.

The highlights of the report are:

  • Online and offline aggregate flex workspace demand for the period between April 21-March 22 through the Qdesq platform was over 214,000 seats spread across 15,000 unique enquiries. In space terms (1 flex seat = 70 sq ft of leasable area on an average), this translates to nearly 15 mn sq ft. This is a significant marker to the advent of flex in mainstream commercial real estate.

  • It is interesting to note that the average deal size (number of seats/enquiry) has increased by around 27% (11 seats in FY 20-21 to 14 seats in FY 21-22) over the same period

  • Aggregate flex enquiries basis the Qdesq data show, that Delhi NCR leads in unique leads (number of firms) as well as enquiries for flex seats in absolute terms. While Bengaluru, Chennai and Mumbai follow next in terms of aggregate seat enquiries, Pune features prominently in the top three in terms of leads, indicating a more diverse occupier base looking for flex options in the latter.

  • The analysis of the aggregated seat enquiries exhibits that, Chandigarh, Indore and Lucknow are seeing robust traction. In fact, there is significant traction across major tier 2 cities in the Northern, Western and Southern India.

  • JLL tracks all major flex seat deals, representative of realised demand for flex space by occupiers. The resurgence in flex space demand is best represented by the number of seats transacted over the past 12 months and the growth seen on a y-o-y basis. Across the top 7 cities, flex recorded over 90,200+ seats leased by occupiers. The flexibility to expand or contract on-demand, shorter lease tenures, fully serviced, amenity-rich offices and being able to create workspaces of the future which act as magnets for returning employees and in the war for talent are key factors fuelling the flex market growth.

  • There are now over 2300 flex centres operational across the top 9 cities, including smaller, unorganized players and mom-and-pop coworking facilities and fitted-out spaces being offered as flex options. Bengaluru leads in terms of such centres followed by Mumbai, Delhi and Pune.

  • The tier 2 cities’ growth story has got a fresh lease of life in the changing real estate landscape post-COVID. As occupiers and corporations look to tap into a mobile workforce and the potential talent pool in these cities, quality real estate and infrastructure is of the essence. This is where flex has stepped in to provide the quality workspaces that are desired.

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