Business

Flexible Space Take Up Touches 10.8 Square Feet in 2019 To Register Annual Growth of 26%: CBRE

Flexible Space Take Up Touches 10.8 Square Feet in 2019 To Register Annual Growth of 26%: CBRE 1

Flexible space stock touched 30* mn. sq. ft. in India in 2019; recording a growth of about 60% from 2018

  • • Bangalore dominated the flexible space stock in India, followed by Delhi-NCR and Mumbai in 2019
  • • In 2019, Bangalore and Hyderabad accounted for about half of the flexible space take-up
  • • Increased inflow of funds was witnessed in 2019, with about USD 140 million of funding provided by angel investors, PE funds and debt funds for flexible space

Bengaluru, NFAPost: CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the findings of its latest report titled ‘India Flexible Space Digest – 2019’.

On the back of technology adoption, increased occupancy rates and growing investments, the year 2019 recorded an all time in flexible leasing activity. As per the CBRE report, the flexible space take-up touched 10.8 mn sq. ft. in 2019.  Among the key markets, Bangalore and Hyderabad accounted for about half of the flexible space take-up in India.  <Link to the report>

The overall stock in flexible space market saw a historic increase of about 60% from about 19 million sq. ft. in 2018 to touch 30 million sq. ft. in 2019. The flexible space stock was mainly dominated by Bangalore, followed by Delhi – NCR and Mumbai in 2019.The CBRE report also highlighted that the uptake in the flexible space leasing in 2019 was dominated by hybrid spaces and managed space (77%) followed by coworking and business centres (23%).

Commenting on the findings of the CBRE report, CBRE India, outh East Asia, Middle East and Africa Chairman and CEO Anshuman Magazine said in today’s dynamic & technology driven business environment, corporates are beginning to explore various workplace solutions which could result in capex reduction and increased agility of their RE portfolio in the sector.

“Given the overall performance of the sector, we expect the demand to remain steady with an overall stock of flexible space anticipated to cross 40 mn sq. ft. by the end of 2020,” said CBRE India, South East Asia, Middle East and Africa Chairman and CEO Anshuman Magazine

Some of the key trends 

Adoption of tech: Many operators have been adopting specific apps that provide intergroup social platforms where occupiers can post business requirements. An innovative example of such tech incorporation is of a managed space operator that was planning to introduce robotics across its centers in the coming quarters. In case of managed office spaces, the operators have been leveraging their tech platforms to efficiently design and build spaces as well as manage and monitor the activity of occupants.

Increased occupancy rate: This was primarily a result of established corporates leasing large-sized spaces in both hybrid and managed spaces. The corporates preferred these spaces as they help reduce capex, provide a locational advantage and increase the agility of their RE portfolios.

Growth in investment activity: Increased inflow of funds was witnessed in 2019, with about USD 140 million of funding provided by angel investors / PE funds / debt funds.

CBRE South Asia Pvt. Ltd Advisory and Transaction Services India Managing Director Ram Chandnani said going forward, the overall share of office space leasing is expected to increase from about 14% in the 2019 to 16-20% in 2020 and touch about 10-12 mn sq. ft.

“Besides leasing space in the top three cities, operators are expected to expand in Hyderabad, Pune and Chennai in 2020,” said CBRE South Asia Pvt. Ltd Advisory and Transaction Services India Managing Director Ram Chandnani.

OUTLOOK FOR 2020

For Occupiers: At the portfolio level, the use of flexible office space – such as that provided by managed and hybrid space operators – is now considered one of the preferred alternative solutions for occupiers. Although this sector may begin to consolidate, occupiers are likely to continue using flexible space as an active component of their overall RE strategy, rather than as a reactive solution.

Corporates are also expected to continue leasing flexible spaces when entering new markets or consolidate operations which typically involves longer lease terms. In addition to an already-evident ‘flight to quality’, occupier demand in 2020 is likely to increasingly focus on user experience and agility. As part of this shift, employee engagement is expected to start emerging as a key driver of occupier strategy.

For Landlords: As “space-as-a-service” becomes a reality, CBRE expects landlords to allocate a portion of their RE portfolio to flexible spaces in both existing and upcoming developments. We expect to see continued development of flexible space in 2020, with landlords becoming more strategic and differentiating their flex offerings to enhance end-user experience.

The model of engagement and partnership between landlords, occupiers and flex operators would continue to evolve in 2020, as landlords create their own flexible space brands or partner with experienced operators

CBRE Group, a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue).

The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide.

The New York Stock Exchange listed company offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. CBRE was the first International Property Consultancy to set up an office in India in 1994.

Since then, the operations have grown to include more than 10,000 professionals across 10 offices with a presence in over 80 cities in India. As a leading international property consultancy, CBRE provides clients with a wide range of real estate solutions, including Strategic Consulting, Valuations/Appraisals, Capital Markets, Agency Services, Asset Services and Project Management.

The guiding principle at CBRE is to provide strategic solutions that make real estate holdings more productive and economically efficient for its clients across all service lines.

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