Flexible office providers are refurbishing old office buildings as they look to add new office spaces due to high demand from corporates and unicorns after the introduction of the hybrid work model during the pandemic.
Leasing grade-B spaces that were vacated during the pandemic is helping the builders get assured rentals from flexible office operators.
And the operators get a discount on refurbished properties.
It also helps in regular income generation till the assets are sold.
“Many grade-B office spaces were vacated during the COVID-19 outbreak. We were able to identify those opportunities and refurbish and rent those assets. There are many such buildings available across cities,” said Sheshagiri Rao Paplikar, CEO, Bhive Fund.
The demand for flexible office space has witnessed 3x growth compared to last year, with the average seats requirement doubling to over 1,000 seats compared to 500 seats earlier from large corporates.
“We have signed up around 750,000 sq. ft. spaces since October last year, where we have refurbished old office buildings. The average age of these buildings is around 20 years. In most of these buildings, we have installed solar rooftops and ensured almost zero groundwater usage,” said Rishi Das, Co-founder, IndiQube.
The demand for coworking spaces is on the rise with businesses focussing on cost optimization to tackle unprecedented crises such as lockdowns in the future.
“Evidently, the pandemic has been a growth catalyst for the coworking sector, and this growth is likely to be manifold over the next 2-3 years. The cost advantage of coworking spaces also clearly outstrip the possible risk factors. Amongst the large-sized deals, flex spaces accounted for about 20%, lagging only behind the technology sector in Q1,” said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.
Flex space operators leased over 1.9 msf of office space in Q1 2022 against 0.2 msf in Q1 2021, recording a 10X rise on YoY basis. Flex space saw its share increasing to about 15% from 5% in Q1 2021. This is led by strong demand from occupiers for flex spaces and the associated flexibility in leases that come with it, said Colliers.
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