Flex Office Spaces Emerge As Occupiers’: CBRE Survey
CBRE has announced today the findings of its latest survey, ‘2023 India Office Occupier Survey’. The survey’s findings highlight that the increasing use of flexible office space is emerging as the top short-term portfolio strategy, with 47 per cent of respondents indicating increased use of flexible office space over the next 12 months. The survey further pointed out that 56 per cent of the respondents intended to have more than 10 per cent of the total office portfolio as flexible spaces by 2025, indicating that flexible spaces will continue to be a key component of occupiers’ portfolios.
In line with the drive for portfolio optimisation and improved efficiencies, ~37 per cent of respondents indicated increasing consolidation to fewer locations. This trend reflects the growing emphasis on streamlining operations and maximizing resource utilization. The survey found that there is growing interest in tier-II cities due to skilled talent pools and improving infrastructure and 13 per cent of the respondents chose to relocate some functions to tier-II cities in Q1 2023 as compared to 8 per cent in December 2021.
India’s attractiveness to global corporates would continue in the medium to long term. Occupiers’ outlook in Q1 2023 towards long-term portfolio expansion remained positive, as 75 per cent of the respondents indicated that the size of their portfolios would increase over the next two years. This benchmark for expansion touched pre-COVID-19 levels, wherein 79 per cent of the respondents in 2019 had indicated portfolio expansion and only about 6 per cent indicated contraction. The survey suggested that occupiers are now more bullish towards expansion as the percentage of respondents that expected a significant increase (>30 per cent) in portfolio size grew from 12 per cent in July 2022 to 28 per cent in Q1 2023. Favourable demographics, a high-skilled and cost-effective talent pool, robust technology & startup ecosystems, availability of high-quality office spaces, attractive rentals, and beneficial government policies are a few key long-term enablers of portfolio expansion by global corporates.
The survey pointed out that as Return to Office plans are ramped up in a hybrid environment, occupiers would strive to find the middle ground between supporting flexibility and ensuring predictable occupancies to utilize their space optimally. As a result, formulating hybrid working rules and policies that balance business goals with workforce needs would be at the top of occupiers’ agendas. To address the challenges faced by new hires in terms of onboarding, collaboration, cultural integration and visibility, occupiers are likely to assign them to a fixed physical office location. This approach was supported by 65 per cent of the respondents. Remote hiring is expected to focus on a combination of work-from-home (WFH) and satellite offices, enabling new employees to periodically visit the office to connect with colleagues and become acquainted with the company's practices and culture. This hybrid approach was favoured by 35 per cent of the respondents.
Enhancing the employee experience is vital to RTO planning, shaped by shared work experiences and relationships. Occupiers prioritize strategies such as integrating employee wellbeing into workplace and workforce strategies (74 per cent respondents), granting greater flexibility through organizational policy changes (70 per cent respondents), engaging all stakeholders to redefine office purposes and designs (60 per cent respondents), and equipping people managers for managing hybrid teams through coaching and upskilling (56 per cent respondents).
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, “Over the past year, we have witnessed a remarkable recovery in the Indian office sector, driven by pent-up demand and the swift implementation of return-to-office (RTO) plans by occupiers. Despite the challenges posed by macroeconomic and geopolitical factors, the sector has shown resilience. Looking ahead to 2023, we anticipate these challenges will persist, necessitating adaptability and strategic foresight.
In terms of office portfolios, our Q1 2023 survey reveals that occupiers will continue to expand into flexible office spaces. An impressive 87 per cent of respondents expect to either maintain or increase the percentage of flexible spaces in their portfolios over the next two years. We anticipate a significant occupier interest in allocating over 10 per cent of their office portfolios to flexible spaces over the next two years.”
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “The increased focus on Return-to-Office (RTO) plans by occupiers, driven by factors such as work-from-home (WFH) fatigue, attrition, and moonlighting, has resulted in a gradual upswing in office occupancies since the second half of 2022, majorly across sectors including BFSI, engineering & manufacturing, life sciences, e-commerce, media & marketing. Our latest survey findings point out that nearly one-third of the respondents reported a utilization rate of more than 75 per cent ."
The survey also highlights a change in occupiers' approach to bringing employees back to the office, which diverges from the trends seen in 2021 and 2022, despite the prevalence of hybrid working arrangements. In Q1 2023, the majority of respondents (96 per cent ) preferred working in the office for at least three days per week, which aligned with the findings of the July 2022 survey (91 per cent ). However, there has been a significant rise in the inclination towards fully office-based strategies, as 40% of respondents opted for this approach in Q1 2023, compared to just 18 per cent in July 2022. Occupiers are expected to limit hybrid working to a portion of their workforce, as revealed by 73 per cent of the respondents who indicated that less than half of their staff would be granted the option. Among the respondents, around 30% stated that hybrid working would be available to 25-50 per cent of their employees.
