Leasing of flexible workspace by corporate up 59% in Apr-Jun: Report

NEW DELHI: Leasing of flexible workspace by corporate rose 59 per cent in April-June at 28,167 desks across top eight cities as they are embracing managed office space amid uncertainties, according to Cushman & Wakefield.

Enterprises had leased 17,691 seats in coworking centres in the April-June quarter of last year across eight major cities — Delhi-NCR, Mumbai, Pune, Bengaluru, Hyderabad, Chennai, Kolkata and Ahmedabad.

In its latest report on India’s office market, real estate consultant Cushman & Wakefield said: “A lot of companies, including the global multinationals, have embraced the managed space concept leading to enterprise flex seat deals standing at 28,167 seats transacted in Q2-22.”

Bengaluru, Pune, and Hyderabad are cities spearheading the enterprise deals in flexible seats, with the three cities accounting for around 75 per cent of all deals since the start of 2021.

Anshul Jain, Managing Director – South East Asia and India, said the growth in office leasing indicates that the overall market fundamentals are really strong.

Jain expects demand to remain robust because of implementation of return-to-work policy and expansion plans by a lot of corporates.

The Executive Centre, one of the leading players in managed office space, Group Managing Director South Asia and GCC Nidhi Marwah said: “Workforce trends like the ‘Gig Economy’ and ‘The Great Resignation’ have proven that pay scale and cosmetic changes in policies are not enough to retain the Gen Z workforce. ”

She said organisations are still comprehending the needs of the new workforce and hence keeping workspace strategies fluid. This has resulted in higher absorption of flexible desks.

“Workforce strategies that are built to champion flexibility are a big draw. Multiple touch-points within the same city where employees can step into work, collaborate and access required infrastructure are expected,” Marwah said.

Ankit Jain, Director & Co-Founder of Skootr, said corporate occupiers are looking for portfolio re-optimisation and focusing on the concept of managed office spaces.

“We have been observing a significant increase in the number of queries for office as an outsourced service. Enterprises are looking out to lease and divest their office spaces to avoid unwanted long-term commitments and capital expenditures,” he added.

Consequently, the share of leasing of office space by coworking operators in the overall absorption number is now in double digits. It is expected to rise further.

As per the data, enterprises leased 10,386 desks in Bengaluru during April-June 2022, as against 5,839 desks in the year-ago period.

In Hyderabad, leasing of flexible workspace by enterprises more than doubled to 5,611 desks, from 2,565 seats.

Pune saw leasing of 5,721 desks in April-June 2022, as against 5049 desks in the year-ago period.

The leasing jumped to 2,378 seats from 445 seats in Delhi-NCR, while absorption surged to 1,456 desks from 267 desks in Chennai.

Kolkata also saw a rise in leasing of flex space by corporates to 1,364 desks from 941 desks. Ahmedabad witnessed leasing of 295 desks as against 95 desks.

However in Mumbai, the leasing numbers fell to 956 desks in the second quarter of this calendar year from 2,490 desks in April-June period of 2021.

WeWork India, Smartworks, CoWrks, The Executive Centre, Skootr, Simpliwork Offices, IndiQube, The Office Pass and 91Springboard are major players among others in the coworking segment that includes managed office space.

On the overall office leasing market, the Cushman & Wakefield report said that gross leasing and net leasing in the first half of 2022 calendar year grew by 71 per cent and 108 per cent y-o-y (year-on-year), respectively as compared to the first six months of 2021.

Demand was driven by healthy hiring outlook of corporates and implementation of return-to-work policies.

The consultant noted that corporates are actively resuming their expansion plans which were earlier on hold due to the second and third waves of the COVID pandemic.

The gross leasing of office space rose to 37.4 million square feet in January-June, from 21.9 million square feet in the corresponding period of the previous year.

Net leasing of office space rose to 16.48 million square feet during the first half of this year, from 7.93 million square feet in the year-ago period, the data showed.