The year 2022 marked an unimaginable milestone in commercial real property, with an incredibly high office vacancy rate that reached a staggering 50.8 million square. ft. according to reports from industry experts. This isn't just an increase over that of the pre-pandemic mean over the last five years (2015-2019) by 3.1% as well as standing at the second highest rate of absorption in the last decade surpassing the 2019 numbers. This increase in offices, driven by the return to work across various sectors, helps increase net absorption but also paints a picture of market stability and a brighter future.
The Rise of Flex Spaces: A Paradigm Shift in Workspaces
In response to changing business needs and portfolio strategy, there's been an evident demand for flexible, agile and modern workplaces. This shift toward flexibility in business operations has brought space that is flexible to the forefront as a top choice for people who work in them. In the last year, there was significant changes in the way that businesses move to flexible workspaces. This is driven by the need for diversification of portfolios as well as catering to the requirements of employees' modern needs.
Harsh Binani, Co-Founder of Smartworks, India's largest enterprise-focused workspace platform, expressed immense optimism regarding Commercial real estate market's growth trajectory. He highlighted the exponential increase of flex spaces within the commercial realm, highlighting the rapid growth of flex spaces. Binani predicted a strong phase of growth and anticipates significant growth and consolidation among the major operators in the flex sector over the five years to come.
Benefits Fueling the Flex Market Growth
The wide acceptance of flex spaces across all sectors highlights their many advantages. Key factors driving the expansion of flex spaces include property cost optimization and scalability, flexible lease tenures and strategies for attracting talent, comprehensive managed service offerings, and the appeal of modern, amenity-rich workspaces. Binani also emphasized this concept by affirming "Flex Harsh Binani is the new way of working," and citing significant leasing trends for the unicorns and companies, which represent around 80% part of the company's portfolio.
Growth Trajectory and Market Predictions
The market for flex space, rising from markets that were shaky, is experiencing a rapid increase in growth. Industry experts forecast the continuation of this uptrend, with a forecast of a double-digit increase in 2023. The hybrid office environment is likely to continue to be the preferred choice for occupiers through 2023, thereby Harsh Binani securing their market shares of flexible spaces. Predictions indicate that flex spaces' market share will climb to 4.2% by 2023, and there are industry projections of double the footprint in the coming two to three years.
The Future Outlook
With the increasing demand for flexible and well-equipped work spaces, the flex space segment is predicted to expand significantly. The transformative shift in workplaces and strategies for portfolios will continue to fuel the increase in demand for flexible, fluid, and modern workspaces across various sectors and companies.