CBRE released its H2 2022 Asia Pacific Flexible Office Market report findings. According to the report, Bangalore topped the list of Asia-Pacific region (APAC) cities having the highest flexible stock ahead of 11 major cities. As of September 2022, Bangalore recorded 10.6 million sq. ft. (Grade-A Assets) flexible stock, the highest among all major APAC cities, including Shanghai, Beijing, Seoul, Tokyo, and Singapore.
Other than Bangalore, two other Indian cities, Delhi-NCR and Hyderabad, also accounted for the highest volume of flexible stock in the APAC region. As of September 2022, Delhi-NCR recorded 6.6 million sq. ft. of flexible stock in Grade-A assets, followed by Hyderabad, with a stock of 5.7 million sq. ft. Moreover, in the Grade-A segment, India and Singapore reported the highest penetration of flexible office space compared to other Asian nations. Hyderabad recorded the highest penetration with 5.5%, followed by Bangalore at 5.4%, Singapore at 4.6%, and Delhi-NCR at 4.4%.
The report also observed that post-pandemic, India continues to witness the highest growth in Flexi–office market in the APAC region. The report highlights the total flexible stock volume in the APAC region stood at 76 million sq. ft., recording a 6% y-o-y growth and is 15% above the pre-pandemic growth level during the Jan-Sep 2022 period. During this period, the total nos. of flexible space centres in APAC stood at ~3000. Tech firms (36%) and business services (28%) companies remain the top users of flexible office space, followed by finance, life sciences firms, and retail firms in the overall APAC flex market.
Commenting on the report, Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE said, “India is leading the flexible A- grade office stock in the APAC region. Occupiers are largely re-engineering their portfolio and workplace strategies to accommodate hybrid working arrangements. This signals a healthy office sector growth amid an accelerated return to office phenomena in India, led by flexible space operators. It is also noteworthy that Bangalore, Delhi-NCR, and Hyderabad account for nearly 35% of the total flex stock (A Grade) in the APAC region, with Bangalore recording the highest flexible stock ahead of Asian cities.”
“The flex industry matured over the past two years,” said Henry Chin, Global Head of Investor Thought Leadership and Head of Research, CBRE APAC. “As we approach the new year, companies that continue to adopt flex spaces would be better positioned to embrace hybrid working arrangements, support their employees, and remain agile in their real estate strategies. Additionally, with companies being able to compare and opt for a variety of flex options, operators have identified and are expanding into secondary markets.”
CBRE APAC study covered 19 major Asia-Pacific markets, including Japan, China, South Korea, Philippines, Hong Kong, Australia, Singapore, and India. The report lists three major trends shaping the flexible office landscape in 2023. These include:
Flexible space operators offering on-demand memberships to cater to more dispersed workforces resulting from the widespread adoption of hybrid work. Growing occupier demand for customized enterprise and turnkey solutions to mitigate rising fit-out costs and CapEx constraints. The uses of asset-light strategies as flexible space operators form partnerships with landlords using management contracts.
All flexible stock tracked in India is in Grade A offices. CBRE research is based on the number of seats transacted in 498 enterprise deals tracked by CBRE between January to September 2022.
