What’s driving Indian office and flex space growth story?
Indian leadership has well-managed to remain symmetrical while navigating its geo-political headwinds. The economic resiliency and rebound in its core sectoral performance post covid pandemic outbreak, has prevented India’s fatigue GDP growth. Today, India has morphed into the 5th largest economy in the world with a rise in per capita income to Rs 1-97lakh. The fiscally balanced union budget Fy23-24 with an impetus to capital expenditure, green energy adoption and heavy infrastructure outlays will script a bullish growth story for India.
At the present juncture Indian economy is decoupling from the world in reference to its growth curve. Western economies are looming over the threat of recession due to the energy crisis, prolonged war, and sticky core inflation. Such unprecedented black swan events have crippled the developed economies amidst volatile geo-political tides. Indian GDP growth pegged on a positive weigh scale at 6.5% has been inducing domestic as well as global institutional players to invest in Indian real estate asset classes.
Strong comeback of office leasing
Commercial real estate has witnessed a record high leasing volume of over 71msf across key markets by the end of 2022. Office occupancy levels dropped among the Grade A assets and rent renewal picked up steam. The return to office phenomenon fueled demand for larger floor plates with social distancing, ESG and balanced work arena factors in play. Trends like market consolidation in the residential segment augured well for commercial spaces with new branded players foraying into commercial spaces. The influx of PE investors is record high in Indian commercial real estate propelled by improved infrastructure outlay to augment last mile connectivity. The slew of infrastructure development will mobilize decentralization of commercial hubs towards satellite cities and peripheral suburbs. Industry players are evaluating to establish a Hub and Spoke model with dispersed commercial portfolio near emerging residential hubs that elevates ease of commute quotient for the human capital. The coworking\ flex space segment has experienced multiplier growth due to work collaboration opportunities enabled in critical pandemic lifecycle.
Flex space drives office space integration
Coworking space will need to adopt ESG measures by aligning with climate conscious goals. It needs disclosure of fossil fuel exposure, adopt green practices, invest in energy efficient byproducts, and strengthen data privacy regulation wireframe. Indian work culture is brimming with hybrid culture under the new normal way of living and flex space will play a major role in redefining the commercial realty landscape. The increase in demand levels is driving the players to go aggressive on additional leasing of workspaces. While metro cities like Bengaluru and Delhi-NCR lead the coworking market share, the scope of business growth is potentially higher in tier cities too. The flexibility, networking and ready to move office quotient offered by flex space in hybrid age acts as a growth cogwheel. The flex spaces offer a unique value proposition of short-term lock-in period enabling ample elbow room for occupiers to reconcile contracts as per their future course. Also, the concept of space and service integration in real estate is effectively led by flex space players. The future of co-working space will shine bright under the blooming Indian economy with buoyancy in the startup, IT&ITEs, and entrepreneurship culture.