Depending on the nature of the business, companies are coming up with different models.
By Malini Bhupta
As the pandemic continues to rage, companies are rebalancing their real estate portfolios and moving into flexible workspaces. While many large companies are surrendering long-term leases and picking up seats in co-working locations across India, those who own real estate are working with consultants to lease space on their campuses to smaller companies and start-ups. Large companies that have their own campuses are evaluating ways to repurpose empty campuses and office spaces to cut costs, as they don’t anticipate the entire workforce to return to work even after the pandemic.
Traditionally, flexible/co-working spaces have been popular with start-ups, but 18 months into the pandemic large corporations are also looking at getting out of long-term leases and owned premises to flexible co-working workspaces. Most companies are back to the drawing board to figure what percentage of the workforce is better off working remotely and the segment that needs to come into work. Depending on the nature of the business, companies are coming up with different models.
Tata Sky Broadband, Colliers India and global technology giant 3M have moved lock, stock and barrel to WeWork’s flexible working locations across India. While Colliers and 3M have shifted their headquarters to WeWork’s managed office spaces, Tata Sky Broadband has signed up a year-long lease with the co-working operator for its 250 employees. Says Karan Virwani, CEO of WeWork, “We have witnessed a robust demand for flexible workspace models among enterprises and foresee this trend to continue. This includes a steady rise in bigger companies demanding flexible solutions for their employees as they relook at their real estate requirements in relation to an evolving workforce and their workspace requirements”.
Given that business cycles are now relatively shorter and harder to predict, companies are looking at the flexibility to scale up or down their real estate needs fast. Speaking at Ficci’s Flexible Workspace Summit, Arvind Kumar, vice president, Global Head of Indirects at NTT Global Sourcing, said, “At a corporate level there is a big shift. Post Covid we realised we had a lot of real estate that nobody is going to use anymore. One of the things that came up was to look at the hub and spoke model. We need flexibility with real estate”.
Large enterprises are rejigging their real estate portfolios and outsource space management to experts, as it is not a core function. Ram Chandnani of CBRE, says businesses are innovating and exploring new operating models. “One of our marquee clients was looking to set up operations in India during the pandemic but was contemplating the feasibility of acquiring their own office space and executing fitouts given the uncertainty caused by recurring and unpredictable lockdowns . We proposed the client opt for a flex solution that could align with their long-term real estate strategy. CBRE assisted the client in getting a customised managed office solution through a leading flex operator for about 1,300 employees in Bangalore with the optionality to size up/down and relocate if required at no additional cost,” he adds.
According to real estate consulting firm JLL, the flexible workspace market is said to cross 50 million sq ft by 2023 driven by increased demand from large enterprises. According to a JLL and Ficci report, the cumulative space take-up by co-working segment has been 6.9 mn sq ft over 2017 and Q12019. The average size of transactions in the co-working segment increased from 37,000 sq ft in 2017 to 77,000 sq ft in 2019. Co-working spaces and developers are also offering customised solutions to large enterprises, be it on design or security.