CBRE - The Era of Flexibility in India, September 2022

The need for agility is becoming greater than ever before, as workforce behaviors have been transformed during the pandemic. As occupiers plan real estate portfolios amid such uncertainty, the inclusion of flexible spaces in these strategies is becoming ever more important. In this report, we present CBRE’s take on how the flexible space segment is evolving in India.

• Flexible space stock in India reached about 47 million sq. ft. in H1 2022 and we expect it to cross 80 million sq. ft. by the end of 2025
• In H1 2022, flexible space operators accounted for over six million sq. ft. of office leasing activity in India
• Flexible spaces in India continue to hold sway among corporates, with occupiers of all sizes increasing the percentage of flexible spaces in their real estate portfolio
• ‘Core + Flex’ is likely to remain a popular strategy among occupiers as it offers them a way to seamlessly integrate traditional leased space and flexible office agreements in their portfolios
• The need to support hybrid and distributed working has replaced CapEx savings as the major demand driver for flexible office space
• As the flexible space segment continues to evolve to meet occupier requirements, operators and landlord-backed brands are focusing on providing premium service offerings and fully customized private offices even as they formulate strategies for their own portfolio expansion

With an increase in quality investment-grade supply, we expect augmented demand for the sector in the coming quarters. We believe that product innovation and customized offerings by flexible space operators are growing, and we expect the popularity of on-demand and subscription-based membership models to rise further in the future.