CBRE South Asia Pvt. Ltd has announced the findings of its latest survey, ‘2024 India Office Occupier Survey’.
The survey indicates the number of companies with over 10% of their office portfolio being flexible workspace is expected to jump from 42% (Q1 2024) to 58% by 2026.
The survey findings highlight that about 30% of occupiers will expand their use of flexible office space as their primary portfolio strategy in the next 12 months.
Over the past five years, flexible space operators have emerged as a prominent force within the Indian office leasing ecosystem, consistently securing a share exceeding 15% of quarterly leasing.
In accordance with the higher appetite of occupiers for flexible spaces, CBRE expects flexible space stock to touch 80 million sq ft. by the end of 2024.
Over the next two years, occupiers are also likely to expand into a higher number of office locations to accommodate a growing workforce and potentially establish a presence in new markets to serve their expanding clientele better.
Furthermore, about 17% of occupiers aim to optimize their office portfolios and achieve greater efficiencies by consolidating their offices into fewer locations.
With the ongoing emphasis on future-proofing office portfolios, occupiers are expected to continue favoring ‘flight-to-quality’ relocations over the next two years.
Demonstrating faith in the Indian office market’s potential, occupiers remain steadfast in pursuing long-term portfolio expansion. In alignment with their broader business trajectory, employee behaviour, and hybrid working policies, almost 70% of the occupiers indicated their intention to increase the size of their overall office portfolio over the next two years.
About 73% of domestic corporations and 78% of global firms anticipate a portfolio expansion of 10% or more over the next two years.
The survey also reveals sector-specific preferences for portfolio expansion in the next two years. Approximately 88% of BFSI firms surveyed anticipate a portfolio expansion exceeding 10% of their current portfolio.
Similarly, 67% of GCC firms plan to increase their office portfolio by over 10%, while 53% of technology firms express a similar intention.
Offices in India are increasingly favoring an “office-first” approach, with occupiers tightening their hybrid working policies over the past two years.
According to the survey, 90% of respondents prefer being in the office for at least three days a week, with the majority preferring working full-time from office.
Further, the report states that modern and sustainable office developments that address businesses’ needs, including recreational facilities and access to public transportation, are projected to capture a larger market share in the coming years.
Occupiers expect landlords to undertake a few building / campus level measures to aid their tenants to facilitate a better office environment.
Some of the key areas of focus indicated by respondents are ESG measures (like EV charging infrastructure), health, safety & wellness certifications along with green certification, improving HVAC solutions for energy efficiency, fitness & wellness facilities and employee experience.
The strategic incorporation of employee wellbeing and redesign of employee experiences has emerged as a crucial element in return-to-office planning by occupiers, as per the survey.
About 67% occupiers indicated that they would allocate 5% or more of their project budget towards ESG implementation.
The survey indicated a noticeable preference of occupiers to expand in smaller cities over the next few years.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “The robust surge in occupier activity within the Indian office sector, highlighted by 2023’s absorption figures, which are the second highest ever recorded, underscores a remarkable trend.”
“This upsurge reflects a heightened occupier confidence, driven by an expanding commercial office footprint and a growing demand for high-quality spaces”, Anshuman Magazine added.
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “The survey highlights a clear preference for ‘office-first’ policies, reflecting an accelerated return to in-office attendance.”
“Additionally, occupiers continue to demonstrate confidence in the Indian office sector, with intentions to expand their portfolios”, Ram Chandnani added.
Ram Chandnani further said, “There’s also a strong focus on workplace transformation, emphasizing the importance of employee experience in achieving business objectives and cultivating a positive work environment.”
Global and Indian firms are increasingly exploring Tier-II / III cities as the next growth opportunity, aided by the presence of a skilled talent pool, competitive costs, and developing infrastructure and connectivity. Technology and BFSI firms are rapidly expanding in Tier-II cities, attracted by their potential.
Domestic firms prefer these cities for expansion in the next one to three years. With a growing talent pool, competitive real estate costs, and improving infrastructure, Tier-II cities are poised to attract more businesses, fostering local economic growth and balanced development.
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