‘Work near home’ boosts flexible space leasing in H1

The leasing of flexible or co-working spaces by companies has seen a spurt in the first half (H1) of the year as companies took offices closer to their employees’ homes during the second wave of the Covid-19 pandemic.

The surge was as much as 73 per cent, with 31,538 seats taken on lease in H1 of 2021 on a yearly basis, said property consultant Cushman & Wakefield. Enterprises had leased 36,255 seats in the whole of last year. In contrast, the leasing of office spaces in six Indian cities in H1 of 2021 fell 22 per cent year-on-year (YOY) to 10.1 million square (sq.) feet (ft), said property consultant Colliers earlier this week.

Cushman said the total seats leased by enterprises could cross 50,000 in 2021.

“The pandemic has forced companies, irrespective of their size, to revisit their footprint — both from a cost and employee flexibility perspective. Given the current market dynamics, several enterprises, large and small, are adopting a cautious, wait-and-watch approach to signing new office leases,” said Anshul Jain, managing director, India and South East Asia, Cushman & Wakefield.

Instead, Jain said corporates are looking at managed spaces as a smart business solution due to the triple benefits of cost savings, lease flexibility, and the hybrid/hub-and-spoke model of working opportunity that they offer. The growing demand from enterprises over the last two to three quarters indicates the surge will continue into the second half of 2021 and 2022 as well, he said.

Rajesh Agarwal, managing director and chief executive officer, Shapoorji Pallonji Investment Advisors, said that corporates are waiting for the uncertainty to end before leasing permanent space, as well as providing disaggregated workspaces for employees closer home.

Co-working players are clearly seeing the shift to flexible spaces. “We have seen a consistent rise in large enterprises wanting to shift to flexible workspaces and sign longterm deals with us. Over 60 per cent of our member base in India comprises large enterprises. Since the lockdown, we have seen 10 per cent rise in our enterprise portfolio, including companies like Tata Sky Broadband, Colliers India, and many more,” said Karan Virwani, chief executive officer, Wework.

Virwani said a key factor for this growth is the focus on business continuity and cash conservation becoming imperative. “Flexible lease options and customised product offerings provided by Wework ensure control on the cash flow, making room for long-term expansion and employee retention and helping them save on overhead costs,” he said.

Tata Sky Broadband in May 2021 signed a one-year commitment to its on-demand service of Wework. This allows its employees to work from any Wework location in the country. Using the on-demand product, teams can choose when and where they would like to come together and collaborate. Colliers India has also recently shifted its headquarters to Wework at Two Horizon Center in Gurugram.

Neetish Sarda, founder of Smartworks, said there has been a growing interest of enterprises in the flexible structure. In the new normal, a more distributed workspace model across cities and regional locations will take precedence.

“With employee health and well-being taking centre stage, companies are changing the pandemic model of ‘work from home’ to ‘work near home’, offering maximum flexibility and, thus, the rise of flex spaces,” said Sarda.

Sarda said the first quarter of 2021 was one of the finest quarters for the company, where it leased more than 300,000 sq. feet space to clients and expanded its footprint in Hyderabad with a 250,000-sq. ft facility — Aurobindo Galaxy.