Indian office occupiers turn to flex spaces amidst persistent COVID-19 woes

The number of flex seats leased by enterprise clients jumped 57.8% in Q1.

In terms of segment-wise leasing activity during the quarter, Cushman & Wakefield reveals that the IT-BPM sector continued to dominate with a 35% share followed by Professional Services and Healthcare & Pharma sectors accounting for 12% each. 

BFSI and Engineering & Manufacturing segment followed closely, each contributing an 11% share in quarterly gross leasing. Leasing by flex space operators was relatively low with a share of 6%. 

Here’s more from Cushman & Wakefield:

In Bengaluru, which saw a quarterly drop in flex space take up, operators at present have stopped exiting their signed spaces on the back of increasing demand from enterprises with 50- 100 seat requirements, with the preference for customised workspaces witnessing healthy growth. 

With no clear sign of a post-COVID world, enterprises are increasingly adopting a cautious approach and are choosing flex workspaces rather than committing to long-term office take up. A 57.8% increase in the number of flex seats (leased by enterprise clients) was recorded in Q1 2021 as compared to Q4 2020. A sharp jump indicates that occupiers are relying on managed space as a smart alternative in the current situation. 

COVID-19 has had a greater impact on the flex space industry, and we expect that the sector is likely to consolidate over the next 3-5 years. The demand for managed space is expected to rise steadily over the next 2-3 years with several firms choosing to adopt hub and spoke models and adopt flex as an integral part of space strategies going forward. Managed spaces are also likely to be a key demand driver in the medium trend, a trend that has been visible in the leasing pattern of a few large occupiers.