The demand for satellite and boutique offices has been on rise as the Covid-19 pandemic has strengthened the importance for hybrid office culture across large companies, but more importantly among small and medium enterprises and professionals.
Several factors including caution towards capital expenditure, need for flexibility in lease terms and allowing mobility to workforce as organisations await more clarity in business conditions and workplace strategies are helping push the demand for satellite offices.
“We are witnessing long-term demand from enterprises who are turning towards flexible workspaces to provide them hybrid, cost-effective and agile business solutions,” said Santosh Martin, chief revenue officer, WeWork India. “However, there has also been an increase in adoption of flex spaces among small businesses, startups and individual professionals who prefer to work from any workspace at prime locations across the country.”
With the third wave of the pandemic ebbing, the growth prospects of the commercial real estate segment are all set to recover. During the most appalling period of the pandemic, WFH had marred the potential of commercial real estate as companies let go off leased spaces to reduce their rental expense.
“Times have changed, so have offices. Today’s offices are more flexible and can accommodate the changing needs of their employees. Going flex or hybrid is one way to ensure that talent stays,” said Radha Dhir, CEO and country head-India at JLL. “Given the new on-ground realities, it’s now a crucial part of occupier real estate strategies.”
Commercial spaces as an asset class witnessed tremendous uncertainty in the beginning of Covid-19 but now it’s gradually diminishing as corporates are inviting their employees back to office as the situation is improving.
“We are witnessing a mindset where institutions and individuals are looking to opt for flexible working spaces that are easy to own and operate,” said Bhasker Jain, head-sales & marketing at The Wadhwa Group. “Long-term leasing in large formats is currently being evaluated by big conglomerates or institutions. Rest for other companies, individuals, SMEs etc are opting for the hybrid model where people can switch between the work near home concept and physical presence depending on their requirements.”
The pandemic has prompted a significant shift in remote working across the globe as companies have realised that they are unable to achieve desired employee productivity and social connections from work-from-home scenarios.
According to Shraddha Kedia-Agarwal, director of Transcon Developers, companies are now looking at a hybrid work environment, which has led to a revival in commercial real estate increasing the confidence of the investors. These offices are developed near the residential areas, which save the commute time and are easily accessible due to the improved connectivity.
This change in scenario is influenced by a wide range of factors—poor connectivity and colliding of work and personal life, a lack of availability of suitable workspace and employees’ fear of commuting long distances in mass transport systems. The organisation understands and respects their employees and is prepared to spend for membership in co-working near their homes.
As workplaces become location agnostic, according to WeWork India’s Martin, this option is ensuring greater flexibility in line for businesses with their needs and hybrid working ways.
The office segment witnessed net absorption of 11.56 million sq ft in October-December 2021, the highest in the last eight quarters, and up by 86% sequentially. Net absorption was up 26% on-year for the half-yearly period of July-December 2021, showed data from JLL India.
Flexible office space footprint across top seven Indian cities has grown by 525% over the past five years and now stands at 38 million sq ft with operational seats exceeding 550,000.