Flexible Offices and Hybrid Work: Impact on Real Estate
“The Increasing demand for flexible offices due to surge in hybrid work. How does this affect the real estate sector?”
Gone are the days when offices used to be a grim and dull place. The changing work style and the round-the-clock working system have given birth to flexible workspace. Today companies focus on employees’ mental health and growth because the growth of the company is directly connected with the individual growth of the employee. The work atmosphere plays a significant role in attracting and retaining assets by helping them with a breeding ground that will assist them in coming up with their own ideas and innovative selves.
What is a flexible workspace?
A flexible workspace can be referred to as a shared office space or flexible space. It is an office space that comes with several modern custom-made creative desk layouts rather than monotonous cubicles such as - hot desks, non-fixed desks, etc. Co-working is a prime example of profitable flexible office space. They are in demand by remote employees, giggers, and traveling professionals. The open office floor plan is highly customizable and provides structure and familiarity, yet quickly fits into the needs of daily work.
As per a global property consultant, the flexible office segment continues to find the companies’ favour and has contributed to 21% of the total space (1.24 m. sq. ft.) during the 1st Quarter of FY 2022. Although the increasing demand for flexible spaces can be seen in Delhi NCR, and Pune, it can be seen particularly active in Bengaluru with the occupancy of 43% of total space. The demand for flexible space has driven leases of co-working facilities to 139,000 seats in FY23, which is a remarkable increase from last year’s 92,400 seats.
The demand for commercial real estate space has increased exponentially and it is solidifying as a mainstream industry. Many real estate investors are investing in co-working spaces. REITs have started responding to the new trend of flexible workspace. It has introduced a portfolio-wide program branding Space+ which is customized to meet tenants’ rapidly increasing demand for flexibility, speed to market, and competitive amenities.
The high demand for flexible workspace has given rise to workspace providers, viz – WeWork, Regus, and others. Lease terms have become more flexible. Upgradation of technology and optimum use of spaces are common today. Office locations have become more accessible for the employees giving a boost to real estate in tier II cities and suburban areas. As the supply of flexible workspace has started to meet its demand, it appears that this will be the new growth venture for real estate. This will lead to a remarkable and dynamic change and development in the real estate sector.
Kautilya, IBS Mumbai.