Stock of operational flex space in India to double in next five years

The stock of operational flexible spaces in India is expected to double and reach 106 mn sq ft in the next five years, a report released on Monday said. Currently, the operational flex stock is 53 mn sq ft, with 839,250 seats, across the top 7 cities in India.

A flex property, short for flexible property, is a hybrid of office and industrial space. It can be used as an office, retail space or warehouse.

According to the "India's Flex Space Market – The brightest star in the CRE galaxy" report released jointly by real estate consultancy JLL and workspace platform Smartworks, the space taken up by enterprises in flex space has risen by 3.2X in the last three years since 2020-21.

Bengaluru, Pune, and Delhi NCR have been the three biggest markets during the past three financial years, combining for a 60 per cent share of all enterprise seats taken up during that period.

"As employees demand more from their workplaces and occupiers look to revitalize their offices while adding a greater degree of dynamic space planning to their overall portfolio strategy, the flex sector has emerged as a strong partner. From an operational footprint of under 20 mn sq ft, the flex segment is 3X in size across the top seven cities, driven by rising demand for managed space solutions from enterprises cutting across geographies and industries," said Samantak Das, chief economist and head of research at Real Estate Intelligence Service (REIS), JLL India.

The technology sector has been the top acquirer of flex spaces in the country for the past three years. But start-ups have been the major demand drivers in the sector.

"Indian start-ups have leased more flex seats over FY21 – FY23 compared to any other sector except technology. Their share has risen to a high of 31 per cent in FY23, the second highest for the last two financial years," the report said. 

The main reason for this is that flex spaces offer them "just the right amount of cost, location, and tenure flexibility while creating flagship, modern workplaces for their employees".

The survey further revealed that an overwhelming 90 per cent of respondents prefer flex in some form or the other. 63 per cent of all respondents want flex as an adjunct to their overall portfolio – keeping conventional spaces but adding more flexibility to their portfolio.

The survey also found that one-fourth of all large enterprises "do not mind moving to a fully flex portfolio", indicating how demand is evolving, with a service-oriented space solution being highly preferred.

"Small enterprises, on the other hand, prefer moving to a fully flex portfolio given the need for agility and cost optimisation," it added.

"Flex has truly gone big as employee experience and technology intersect to create modern workspaces. It is no longer an afterthought or a short-term tactical decision. The continued rise of managed spaces, even post-Covid, has been truly remarkable, significantly propelling the overall growth of the flex segment," said Neetish Sarda, founder at Smartworks.

"This does not mean that the demand for conventional offices has been cannibalized," added Das.