India’s commercial real estate (CRE) sector is battered by the Covid-19. India Inc’s rapid and complete shift to work-from-home at the very onset of the pandemic had left office spaces empty and commercial developers in quandary.

According to ‘India Market Watch Office H1 2020’ report by property agent Savills, office absorption and supply recorded significant y-o-y decline as on H1 2020. While office space absorption fell to approx. 13.7 mn sq. ft in H1 2020 from nearly 32.3 mn sq ft. in H1 2019, cumulative supply addition dropped to 13.5 mn sq ft. from 26.6 mn sq ft. during this period.

But it’s not all doom and gloom. The pandemic appears to be a blessing in disguise for some. With remote working gaining wider acceptance and companies looking to de-densify their office space and cut down their capital expenditures on fixed assets, flexible or co-working workspace seems to be the preferred choice of many employers.

“Wherever conventional office spaces are coming up for renewal or expiry, the users are giving it up and moving into a flex environment,” said Amit Ramani, Founder & CEO of India’s largest home-grown flex workspace provider, Awfis.

“For the last four months, our sales have been extremely good at almost 80-85 per cent of the pre-covid levels. So clearly, we see that the flex-space market will see an uptick because cost containment from capex to opex, flexibility, business continuity planning and employees opting to work from home or near home,” Ramani added.

“Post pandemic, companies are not putting much capex on their office and they want more of an opex model. So co-working definitely will be one of the choices,” said Tushar Mittal, CEO of Studiokon Ventures, a Gurugram-based co-working space and turnkey interior solutions provider.

Property consultant Anarock in a report ‘Indian Real Estate: A different world post-Covid’ also said the demand for co-working space will increase to 6-7 per cent of the occupied office space from the current level of 3-4 per cent. It also highlighted that per-capita space allocation may increase due to social distancing norms and companies will consider decentralising office spaces to ensure business continuity.

“As companies come back, they will have BCP (business continuity planning) as part of their core plan. They will shrink their one location but also distribute their staff across multiple locations in a city or geography,” Ramani said, adding, “For example, a company with 100 employees will follow a 60/30/10 split for deciding the work location (work from home, work near home or work from the main office) of its employees depending on work profiles, work style and individual preferences.”

Studiokon’s Mittal also said, “Lot of companies are now experimenting with a hybrid model under which employees are allowed to work in places close to their home. So, demand for flex offices will increase but at the cost of office space.”

“The Covid-19 pandemic has accelerated the shift to flexible workspaces with businesses of all sizes looking to manage cash-flows effectively by moving costs to a variable model. Corporates and large enterprises will avoid high capital expenditures and look towards flexible working spaces to expand the business,” said Manas Mehrotra, Chairman, 315Work Avenue, a Bengaluru-based co-working space provider.

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