The age of flex: Creating future-ready workplaces

Flex operators leased 8.8 million sq ft in 2021-H122, 63.4% of total space leased in the preceding two years: JLL-CoWrks report

September 22, 2022
  • Samantak Das
  • Rohan Sharma

At a time when work is finding new meaning, digitization is taking over traditional businesses and new sectors are emerging, the office is no longer just a workplace. Need for collaboration and collisional conversations that engender innovation while fostering organizational culture and ethos is increasing. Demand for flexibility in work patterns has become a key ask from the workforce and organizations are, consequently, looking at making their real estate portfolios suitable for the new normal.

Flexible (flex) spaces have gone mainstream over the past 3-4 years as big enterprises looked at imbibing ‘flex’ in their portfolios. As this trend evolved, from merely a cost-saving perspective and for fulfilling short-term interim space needs, the shift to activity-based working styles has blended well with the addition of flexible spaces in the portfolio. In the post-COVID, return to work scenario, flex spaces will also support portfolio optimisation strategies of occupiers and build-out of spaces, which help in attracting and retaining talent.

In this report, we look at how flex, while staying resilient over the course of the pandemic, has now evolved to become a key part of occupier real estate strategies, given the new on-ground realities. Flex operators are creating a workplace experience unique to every occupier and as flex absorbs hospitality-like characteristics, managed spaces will be instrumental to a bespoke workplace experience.

Key highlights:

  • India’s flex segment penetration of office stock currently stands at 3.9%. Growing rapidly, it has risen from 3.0% in 2020 to its current level.

  • The year 2019 was the golden year for flex, with 10.4 million sq ft leased by flex operators amounting to 17.5% of total leasing activity for the year across occupier segments. The pace of growth slowed considerably in 2020 with flex leasing volume falling by over 50% during the year. In 2021, the flex space segment saw its leasing share rise to 11.4%, although absolute growth numbers remained off the previous highs.

  • The period of H1 2022 has been characterized by the mainstreaming of the flex segment in occupier space strategies with its share of leasing activity rising to 20.4% highest till date. In fact, flex leased 2.8 mn sq ft in Q2 2022, the highest in 12 quarters and the H1 2022 numbers are already 30% higher than the annual flex space take-up for both 2020 and 2021 individually.

  • Top 10 operators account for ~396,600 seats across the top seven cities, which is equivalent to 58% share of total operational seats. They also account for 25.2 million sq ft of operational area under flex stock across the top seven cities.

  • In the current operational seat cost analysis, the most dominant offering is a per seat cost of up to INR 10,000 per month. Growth, however, lies in the price segments encompassing the INR 10,000-20,000 per seat per month range. In fact, over the past six years, the growth rate of flex seats in the range of INR 12,000-18,000 per seat per month at over 9X, has been nearly at par with growth in the lower price range (10X).

  • The demand for flex space has become an additive force to the overall office demand, which has undergone a change in structure and form. With the pandemic-induced need for flexibility in the real estate portfolio, while over 121,000 seats were leased by enterprises across 2020 and 2021, we have already seen 65,171 seats leased in H1 2022, which is nearly 54% of enterprise activity in a quarter of the time. Domestic firms have shown an improved sentiment in terms of adopting flex with their share rising from 35% in 2019 to 43% in 2021 and 46% in H1 2022.

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