About 58% Firms Intend To Grow Flexible Office Space Portfolios By 2026: Survey

CBRE South Asia has released the findings of its latest '2024 India Office Occupier Survey', which reveals that the proportion of companies with more than 10 per cent of their office portfolio in flexible workspaces is set to rise from 42 per cent in Q1 2024 to 58 per cent by 2026.

The results highlight a significant shift towards flexible office spaces and a robust commitment to environmental, social, and governance (ESG) objectives among Indian companies.

Over the next 12 months, approximately 30 per cent of companies plan to increase their use of flexible office space as a central component of their office strategy.

This trend is expected to continue as companies look to adapt to changing work patterns and employee expectations. Flexible space operators have become a key player in the Indian office leasing market, consistently holding a share of over 15 per cent of quarterly leasing activity.

By the end of 2024, CBRE anticipates that the total flexible space stock will reach 80 million square feet. In response to the growing demand for flexible workspaces, companies are also likely to expand into a greater number of office locations.

This will allow them to better accommodate a growing workforce and tap into new markets. Many firms are exploring the decentralisation of their offices, employing a mix of traditional and flexible spaces tailored to specific business needs.

However, the trend towards flexibility is balanced by a push for efficiency. About 17 per cent of companies aim to consolidate their office spaces into fewer locations to streamline operations and cut costs.

This consolidation strategy aligns with the broader trend of 'flight-to-quality' relocations, where companies are moving to higher-quality office spaces to better meet their evolving needs.

Occupiers remain committed to long-term expansion in the Indian office market, with nearly 70 per cent indicating plans to grow their office portfolios over the next two years.

This includes 73 per cent of domestic corporations and 78 per cent of global firms, who anticipate expanding their portfolios by 10 per cent or more.

The survey highlights sector-specific trends, with 88 per cent of BFSI (Banking, Financial Services, and Insurance) firms, 67 per cent of Global Capability Centers (GCCs), and 53 per cent of technology companies planning significant portfolio expansions.

While hybrid working models remain common, there is a clear shift towards an "office-first" approach. The survey finds that 90 per cent of respondents prefer to be in the office for at least three days a week, with a growing number of employees favouring a full-time office presence.

This shift reflects a tightening of hybrid work policies as companies emphasize the benefits of in-person collaboration and a structured work environment.

Modern, sustainable office developments are poised to capture a larger market share in the coming years.

Occupiers are increasingly seeking buildings with features that support ESG objectives, such as electric vehicle charging infrastructure, health, safety, and wellness certifications, and green building certifications.

About 67 per cent of companies plan to allocate over 5 per cent of their project budgets towards ESG initiatives. This focus on sustainability is driving landlords to improve energy efficiency, provide fitness and wellness facilities, and enhance overall employee experiences.

The survey also indicates a growing interest in expanding into smaller cities. Tier-II and Tier-III cities are becoming attractive options for both global and Indian firms due to their skilled talent pools, competitive costs, and improving infrastructure.

Technology and BFSI firms are particularly active in these areas, with domestic firms showing a preference for expansion in these cities over the next one to three years.

As a result, these cities are seeing a shift towards modern office parks and an increase in flexible workspace operators catering to the needs of enterprises and startups.

Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, "The robust surge in occupier activity within the Indian office sector, highlighted by 2023's absorption figures, which are the second highest ever recorded, underscores a remarkable trend."

He added, "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."

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, "The survey provides valuable insights into evolving occupier preferences amidst business growth and future aspirations. The survey highlights a clear preference for 'office-first' policies, reflecting an accelerated return to in-office attendance."

He added, "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." (ANI)