Big realty developers entering flexible office segment amid Covid uncertainty

Large property builders and investors such as Prestige Group, Salarpuria, DLF and Brookfield Asset Management have entered the flexible office segment, which is growing at a fast clip since the emergence of a hybrid work model amid the Covid-19 pandemic.

These firms have either tied up with large co-working operators or acquired a portfolio of assets in the managed office space after witnessing adoption of the new concept by mid-sized organisations as well as large corporations.

Brookfield Asset Management entered the segment by acquiring the RMZ group's co-working platform CoWrks.

DLF is now offering pre-fitted flexible space solutions with complete fit-outs and flexibility in the number of seats and lease tenure.

“From an occupier point of view, they prefer fully fitted spaces to save the capex on fit-out costs and to have the flexibility to increase or decrease the space over a period of time,” said Amit Grover, executive director, DLF Offices. “In the post-pandemic era, there will be a much increased demand for ‘new age workspace experience’ that promises safety at work, is sustainable to operate and provides flexible spaces and open areas to collaborate, connect and belong.”

Real estate developer Prestige Group has entered into a revenue-sharing model with Awfis Space Solutions to offer flexible options to its corporate clients.

Through this alliance, Awfis Space Solutions will provide more than 200,000 square feet of grade-A flexible office spaces with a total capacity of more than 4,000 seats within Prestige Group's commercial properties in three south Indian cities.

“Considering the evolving consumer needs in light of the pandemic, we are bullish on the longevity of the co-working model in India,” said Juggy Marwaha, CEO of Prestige Office Ventures.

Office space operators expect flexible models to expand quickly after the vaccination programme gathers momentum as companies look at options to scale up and down quickly.

“There are many firms who want to move offices to return to work, and we are building around 4 lakh sq ft of ready inventory. We are looking to expand much more aggressively now either through franchise model or on our own,” said Kunal Walia, managing director, Simpliwork, in which Salarpuria Sattva has a stake.

Co-working in India has steadily challenged the traditional office space leasing activity, having grown to about 15% in the first half of 2021 from about 5% share in 2016-17.

A CBRE report said that India’s flexible office stock is expected to grow by 10-15% year-on-year over the next three years.

The pandemic has led organisations across sectors to reassess the overall seat requirements ever since work-from-home gained acceptance.

As a result, most occupiers were considering alternative real estate or workplace strategies, with some consolidating their operations and others exploring the ‘hub and spoke’ model.

Leading office space operators report occupancy levels of less than 10% across the country as employers continue to study the impact of Covid-19 infection rates, with cities such as Bengaluru and Hyderabad, which are dominated by IT workforce, still behind the national average.

Experts say that most companies, including multinationals, are expected to start ramping up employee headcount from January 2022.