In recent transactions, companies including Microsoft, EY, DE Shaw India, Coforge, Shell, Groww, and Air India have leased substantial office space through managed office providers to facilitate operational expansion.
In the period spanning Q1 to Q2, Google acquired 4,000 seats in Bengaluru, while Mastercard leased 1,000 seats in Navi Mumbai and EY secured 2,400 seats in Pune.
“The adoption of enterprise seats closely aligns with the widespread acceptance and adoption of the managed space and the overall flex model,” said Neetish Sarda, founder of Smartworks, a managed workspace provider. “We have around 8 million sq ft of space under management and are in the process of closing another million square feet spread across multiple geographies. Managed space is more about integrating flexibility, aspirational amenities and cost savings into demand for flex workspace solutions, with enterprises preferring managed space solutions to achieve a better work-life balance.”
According to JLL, enterprises expanded their office space leasing activity significantly in FY23, going from 92,400 seats in FY22 to 139,000 seats across major cities in the country. The growth was particularly prominent in cities such as Bengaluru, Pune and Delhi NCR.
“The occupier-flex operator relationship is not limited to one centre but extends to current and future space planning,” said Sumit Lakhani, deputy CEO of Awfis Space Solutions. “We have adopted a demand-led supply model to meet the needs of our diverse clientele, offering Grade-A, fully managed workspaces to many multinational corporations, as well as rapidly growing startups. At present, our client mix consists of 40% MNCs and 40% SMEs/mid-corporations, with the remaining 20% coming from startups and freelancers.”Industry experts said companies of all sizes–from startups to Fortune 500 corporations–have been expanding rapidly. They incorporate flexible office solutions into various aspects of their operations, including housing their main offices and high-end research and development teams, across sectors like technology, financial services, manufacturing, and consulting.“Flex spaces continue to gain larger ground with occupiers as they focus on building operational efficiencies through a distributed work model. The second half of 2023 has started on a promising note with the resurgence in demand across geographies,” said Arpit Mehrotra, managing director, Office Services – South India & Head of Flex-India, Colliers.
Managed office spaces have expanded both in terms of size and number of locations. Operators now manage larger portfolios, and enterprise clients typically occupy spaces with more than 500 seats, compared with the previous range of 100 to 300 seats.
Bengaluru-based flexible office operators have also seen many Unicorns expand from their campuses, with flexibility becoming the top choice for the companies.
“Flex space arrangements seemed viable for near to medium-term space requirements of occupiers. Our focus is to open centres closer to the IT hubs with bigger floor plates, as many companies are now looking to scale up or down, depending on the requirements,” said Ashish Agarwal, cofounder and CEO of Enzyme Office Space.
In spite of the global economic challenges, many tenants initially adopted a cautious approach to expansion. However, in Q2 of 2023, there was a notable rebound, with 14.6 million sq ft of office space absorption in the top six cities, marking a 2% year-on-year increase, according to Colliers.
The flexible office segment has shown remarkable growth, tripling in size by March 2023. In the first half of 2023, this segment leased 4.5 million sq ft of office space in the top cities, reflecting a 25% year-on-year growth.
