NEW DELHI, July 1
Do you know that over the past five years, flexible space operators have emerged as a prominent force within the Indian office leasing ecosystem. As per 2024 India Office Occupier Survey by CBRE, the number of companies with over 10 per cent of their office portfolio being flexible workspace is expected to jump from 42 per cent in Q1 of 2024 to 58 per cent by 2026. The survey also highlights that about 30 per cent of occupiers will expand their use of flexible office space as their primary portfolio strategy in the next 12 months.
While companies across sectors indicated increased usage of flexible workspaces, domestic occupiers indicated a higher preference compared to American corporates. The survey reflects that flexible space stock will touch 80 million sqft by the end of 2024. About 17 per cent of occupiers aim to optimise their office portfolios and achieve greater efficiencies by consolidating their offices into fewer locations. The reason behind this being occupiers get to streamline operations and reduce costs associated with maintaining multiple offices.
Over the next two years, almost 70 per cent of the occupiers indicated their intention to increase the size of their overall office portfolio in alignment with their broader business trajectory, employee behaviour, and hybrid working policies. About 73 per cent of domestic corporations and 78 per cent of global firms anticipate a portfolio expansion of 10 per cent or more over the next two years, the report states.
When it comes to sector specific areas, approximately 88 per cent of BFSI firms surveyed anticipate a portfolio expansion exceeding 10 per cent of their current portfolio.
Similarly, 67 per cent of GCC firms plan to increase their office portfolio by over 10 per cent, while 53 per cent of technology firms express a similar intention. Offices in India are increasingly favouring an ‘office-first’ approach, with occupiers tightening their hybrid working policies over the past two years. According to the survey, 90 per cent of respondents prefer being in the office for at least three days a week, with the majority preferring working full-time from office. Occupiers expect landlords to undertake a few building / campus level measures to aid their tenants to facilitate a better office environment.
The key areas of focus indicated by respondents are ESG measures, health, safety and wellness certifications along with green certification, improving HVAC solutions for energy efficiency, fitness & wellness facilities and employee experience as about 67 per cent occupiers indicated that they would allocate 5 per cent or more of their project budget towards ESG implementation.
Anshuman Magazine, Chairman and CEO – India, South-East Asia, Middle East and Africa, CBRE, said, “The surge in occupier activity within the Indian office sector, highlighted by 2023’s absorption figures, which are the second highest ever recorded, underscores a trend. This upsurge reflects a heightened occupier confidence, driven by an expanding commercial office footprint and a growing demand for high-quality spaces.
Moreover, the market has been buoyed by pent-up demand from businesses that postponed leasing decisions during the pandemic, further fuelling the current momentum.”
The preference of occupiers to expand in smaller cities over the next few years as global and Indian firms are increasingly exploring tier-II / -III cities as the next growth opportunity, aided by the presence of a skilled talent pool, competitive costs, and developing infrastructure and connectivity. Moreover, technology and BFSI firms are rapidly expanding in Tier-II cities, attracted by their potential. Domestic firms also prefer these cities for expansion in the next one to three years, CBRE maintains.
Office space in these cities is shifting to modern office parks, and flexible workspace operators are expanding to cater to enterprises and start-ups.
This trend is driven by factors such as skilled workforce, improving infrastructure, cost-effectiveness, government support and the benefits of exploring new geographies.
Apart from the major cities like Bangalore, Hyderabad, NCR, and Mumbai, occupiers are particularly interested in expanding in Chennai and Pune, along with a surge in both office leasing activity and new office space supply.
“The survey highlights a clear preference for ‘office-first’ policies, reflecting an accelerated return to in-office attendance. Additionally, occupiers continue to demonstrate confidence in the Indian office sector, with intentions to expand their portfolios. There’s also a strong focus on workplace transformation, emphasising the importance of employee experience in achieving business objectives and cultivating a positive work environment,” Ram Chandnani, Managing Director, Advisory and Transactions Services, CBRE India, added.
