Flexible space market stocks see 50% increase
CBRE South Asia, a real-estate consulting firm, recently announced the findings of its latest report ‘Flexible Space’ Tenant Survey – 2018. According to the report, the overall stock of flexible space market in India (including all seven Indian cities) increased by about 50%, from almost 10 million sqft in 2017 to about 15 million sqft by Q3 2018, making it among the biggest markets in the Asia-pacific region.
Furthermore, Bengaluru and Delhi-ncr were the largest markets for flexible spaces in India, with a combined share of almost 55% in overall leasing by flexible space operators. The report also highlights that flexible spaces account to approximately 1.7% of total stock in Asia-pacific; Shanghai and Delhi-ncr are the only two cities where flexible space share is more than 3% of the overall office stock.
Leasing activity by flexible space operators quadrupled from 2016 levels to about 3.5 million sqft in 2017.
More than 80% of the leasing by flexible space operators was witnessed in the top three cities of Delhi-ncr, Bengaluru and Mumbai.
Moreover, the share of flexible spaces as a part of total office absorption has also doubled from 5% in first half of (H1) 2017 to about 10% in H1 2018.
Commenting on the findings of the report, Anshuman Magazine, chairman, India and South East Asia, CBRE, said, “Originating as a shared service for start-ups, flexible spaces are now being utilised by established corporates as well to make their portfolios more agile amid a dynamic business environment.”
“Given that the Indian flexible space market is one of the biggest across Asia-pacific region, we anticipate that this segment will remain high on the investor radar as well. We expect that the leasing quantum of this segment would rise from about 5.4 million sqft in 2018 to
MORE THAN 80% OF THE LEASING ACTIVITY BY FLEXIBLE SPACE OPERATORS WAS IN THE TOP THREE CITIES OF DELHI-NCR, MUMBAI AND BENGALURU
at least about 7-9 million sqft by 2020,” he added.
In August 2018, CBRE India’s Research and A&T Occupier Group conducted interviews with leading flexible space tenants across the country to get their views on the overall experience of operating from flexible spaces.
The survey covered both global and domestic tenants operating out of various flexible space formats such as co-working, business centres and hybrid spaces.
The coverage of this survey was wide enough, including tenants whose share of flexible spaces in their overall portfolio ranged from less than 5% to more than 50%.
The respondents belonged to a wide spectrum of industries; ranging from technology, banking, financial services, engineering, manufacturing to media and e-commerce.
The survey that was undertaken also indicated that respondents had varied responses towards working from flexible spaces, depending on the sectors they belonged to. For instance, BFSI corporates, under heavy regulations for data privacy and cyber security, are currently in their nascent stages of incorporating agility in their office portfolios.
The survey also found that ‘Core + Flexi’ space solutions are conducive for space efficiency, which is the key to cost management across the globe. A huge advantage for flexible spaces was low or negligible upfront costs in comparison with a traditional lease, a statement affirmed by 70% of the total respondents.