In Q1, flexible workspace cos accounted for about 11% (0.4 mn sq ft) and 19% (340,000 sq ft) of gross take-up in Bengaluru & Delhi-NCR
Bengaluru, NFAPost: The impact of Covid-19 has accelerated the past trends including enterprise outsourcing becoming mainstream and the fortune of flexible workplace companies, finds Colliers International.
In a report published on Flexible workspace, Colliers International states that highly amenitised assets with best-in class hospitality being ‘table stakes’ for any new office development.
“Flexible workspace companies will have to face a continued boom in wellness offerings; the revival of suburban locations and further operator fragmentation. The new trends such as the integration of home as a place of work and the growing importance of the digital experience have also emerged,” states Colliers Internation report.
The report also came up with the occupier strategies as they adapt to the new reality and models in which asset owners can deliver flexible workspace and the impact they have on valuation, together with our view on fragmentation and community in a post Covid-19 world.
A fully outsourced workspace that is a customised, private environment delivered and managed by a third party. Occupiers can increase the flexibility of their portfolio through shorter commitments, mitigated capital expenditure and reduced balance sheet liability.
Flex & Core
An occupier partners with an operator to enter an asset. The occupier either commits to less space for their core requirement and the operator/asset owner launches a flexible workspace location in the same building or the occupier commits to ‘anchor’ the new location and provides options for future expansion.
An occupier can reduce property costs by partnering with a flexible workspace operator to repurpose space into flexible workspace, thus mitigating property expenses and even generating income.
Hub & Spoke
If an occupier wants to reduce the reliance on a single headquarter building and implement a dispersed occupancy strategy, it can take smaller hubs across a city, region or country (i.e. in lower cost locations), resulting in improved work/life balance for employees and reduced commute times.
When an occupier has teams or individuals that work remotely or travel frequently, it can offer membership to a network of drop-in spaces across a region, improving efficiency and productivity for its remote workforce while also reducing physical office space and fixed property expenses.
According to Colliers International report, Bengaluru accounted flexible workspace operators leased approximately 2.2 million sq ft in 2019. This accounted for around 15% of the gross office space take up across the city.
“In Q1 2020, flexible workspace operators accounted for about 11% of the gross take-up, approximately 0.4 million sq ft of space in Bengaluru. Due to the impact of Covi-19, the resultant lockdown and expectations around social distancing norms, we believe flexible workspace operators will slow their expansion over the next six months,” states the report.
South India at Colliers International India (South India) Office Services Managing Director Arpit Mehrotra the company foresee some consolidation of operators taking place at the entity level.
“Operators which invest in workplace hygiene and sanitation, as well as social distancing measures, should see greater enquiries from small and medium enterprises since flexible workspace could reduce occupiers’ upfront capital expenditure”, says South India at Colliers International India (South India) Office Services Managing Director Arpit Mehrotra.
Colliers International India states that Delhi-NCR witnessed a strong demand from flexible operators for space in 2019, accounting for nearly 18% of the gross take-up in the market.
“Noida accounted for 48% of flexible workspace operators’ take-up, followed by Gurgaon (38%), while the remainder was in Delhi,” said the report.
Colliers International Corporate Solutions Executive Director Amit Oberoi said in Q1 2020, flexible workspace operators accounted for 19% of the gross take-up in Delhi-NCR with approximately 340,000 sq ft, while the overall office market demand began to slow in Q2 due to India’s COVID-19 lockdown.
“In the long term, the fundamentals for the office market remain strong and demand is likely to be driven by IT-BPM (business process management) and consulting occupiers. Flexible workspaces will be key beneficiaries as clients look at flexible office options in an uncertain business environment”, says Colliers International Corporate Solutions Executive Director Amit Oberoi.