3 reasons why flex office spaces are booming in Bengaluru, India
A record 6,000 seats in flex spaces were absorbed in Q3 2021 alone.
Flex spaces in Bengaluru saw around 6,000 seats absorbed by occupiers from IT/ITeS, finance, insurance and e-commerce sectors in Q3 2021. JLL says this has been the highest number recorded since the inception and subsequent growth of the co-working or flex-space sector in the city.
“Flex-space providers were also leading the Grade A office leasing in the same period, contributing to 48% of the city’s total absorption, well ahead of manufacturing-industrial (20%) and IT/ITeS (14%) sectors, which are traditionally the leading demand drivers in Bengaluru,” JLL adds.
Here’s more from JLL:
Pre- vs post-pandemic behaviour – service providers and occupiers
In 2019-20, some of the most active flex-space service providers in the city included local players like Goodworks, Cowork, 315 Work Avenue, Simpliwork, and Bhive Workspaces. They opened multiple facilities in popular micro markets like CBD, Koramangala, Marathahalli and Whitefield. The share of flex players within total leasing volumes each quarter was between 10-25% on average, and the industry was all set to take flight. However, with the onset of the pandemic, decisions were put on hold for most of 2020.
By the end-2020, activities began to accelerate, and the first ‘V’ shaped recovery was observed in Q1 2021 before the second COVID wave stalled plans yet again. Since then, a much steeper ‘V’ shaped recovery has been observed in 3Q21 as players like The Executive Centre (TEC), Awfis, Workflo and others have begun operations in Domlur, Whitefield and Outer Ring Road – one of the most popular markets in Bengaluru.
In terms of demand for seats, q-o-q growth has been observed since 4Q20. The second wave has had a much lower impact on occupiers’ decisions than the previous one owing to increased preparedness and knowledge. Key flex-space occupiers in the city today include giants like Microsoft, Tata Technologies, Ola, Ikea and Morgan Stanley, among others.
Reasons for flex-space sector’s growth from strength to strength
- Flex spaces provide convenient plug-and-play options wherein companies can hop on and off based on their decisions to expand or contract. They can consolidate or distribute into a hub-and-spoke model or experiment with hybrid work set-ups. As the pandemic has been taking a new shape every quarter, company-level decisions have increasingly become dynamic, reflecting their spatial choices.
- Flex spaces accommodate minimal expenditure and little effort are required on fixed costs and space management. Their flexible contracts include low-security deposits and lock-in periods. Flex-spaces have transformed the workplace from a product to a service to remain relevant amidst the pandemic. Membership-like set-up enables workers to access facilities anywhere across the country, which supports remote work as well.
- Flex operators now have increased preparedness based on their learnings from India’s first COVID wave. The country’s rapid vaccination drive and the consequent return-to-work policy, being implemented across companies, have been a catalyst in the co-working sector’s rising popularity.
As companies adopt a more employee-centric approach, they are starting to value flexibility as a central theme to a workplace. Recent deals in Bengaluru, like 3M moving its headquarters to a 17,000-square-foot facility at WeWork Prestige Central, Morgan Stanley taking 900 seats at CoWrks, Brookfield Ecoworld and Rakuten taking 3,000 seats at Workspace, Bagamane Pallavi, are testament to the fact that the sector’s success is here to stay and on a sustainable growth journey in the city post-pandemic as well.