India leads in flexible market space markets
NEWDELHI: CBRE South Asia Pvt. Ltd, a real estate consulting firm, recently announced the findings of its latest report titled ‘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 sq. ft. in 2017 to about 15 million sq. ft. by Q3 2018, making it amongthebiggest markets in the APAC region. Furthermore, Bangalore 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-NCRaretheonlytwocities where flexible space share is morethan3% of the overall office stock.
Leasing activity by flexible space operators quadrupled from 2016 levels to about 3.5 million sq. ft. in 2017.
More than 80% of the leasing by flexible space operators was witnessed in the top three cities of Delhi-NCR, Bangalore and Mumbai. Moreover, the share of flexible spaces as a part of total office absorption has also doubled from 5% in H1 2017 to about 10% in H1 2018.
Commenting on the findings of the report, Anshuman Magazine, chairman, India and SouthEast Asia, CBRE, said: “Originating as a shared service for start-ups, flexible spaces are now being utilized by established corporates as well to make their portfolios more agile amid a dynamic business environment. Given that the Indian flexi- ble space marketis oneof the biggest across APAC, 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 sq. ft. in 2018 to about 7-9 million sq. ft. by 2020.”
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 centers and hybrid spaces. The coverage of this survey was wide enough, including tenants whose share of flexible spaces in their overall portfolio rangedfromless than5% to more than 50%.
Therespondents belonged to a wide spectrum of industries; ranging from technology, banking, financial services, engineering, manufacturing to mediaand e-commerce.
The survey also indicated that respondents had varied responses towardsworkingfrom flexible spaces, depending on the sectors they belonged to. For instance, BFSI corporates, underheavyregulations for data privacy/security, are currently in the early stages of incorporating agility in their office portfolios.
The survey also found ‘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 / negligible upfront costs in comparison with a traditional lease, a statement affirmed by 70% of our respondents.