CBRE, India’s leading real estate consulting firm, today announced the findings of its latest report titled ‘India Flexible Space Digest – H1 2019’. According to the report, the overall flexible space take-up in India reached about 4.6 million sq. ft in H1 2019. During this period, Bangalore accounted for almost 30% of the leasing by flexible space operators.
Commenting on the findings of the report, Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East, and Africa, CBRE, said: “India is currently one of the leading flexible space markets in APAC and we expect increasing investments in this segment going forward. Office stock is expected to grow from 600 mn sq. ft. in mid-2019 to a billion sq. ft. by the end of 2030 and flexible space will comprise 8-10% of the total office stock”.
Flexible space stock crossed 50 million sq. ft. across leading cities in APAC during Q1 2019; in India, this stock exceeded 20 million sq. ft. This consistent growth in the country was a result of operators leasing medium- to large-sized spaces across cities.
The number of small- to medium-sized deals (20,000 – 100,000 sq. ft.) rose from 52% in H1 2018 to 61% in H1 2019. Moreover, the number of large-sized deals (exceeding 100,000 sq. ft.) increased from 6% to 13% y-o-y in H1 2019.
Some of the key trends visible in H1 2019 include:
Increasing occupancy rate – This is primarily a result of established corporates leasing large-sized spaces in recent times, in order to provide ‘free addressing’ options as well as improve the agility of their RE portfolios.
New sources of funding – We are witnessing rising instances of angel / PE funding as well as of operators joining hands with developers to operate on a revenue-sharing model. An instance of funding during H1 2019 is of Workspace receiving INR 30 crore from SmartOwner Capital Growth Fund. We expect to see more creative funding avenues such as profit-sharing and management agreements going forward.
Penetration into tier II cities – Operators have turned their focus from the top seven cities to tier-II cities such as Jaipur, Goa, Chandigarh and Lucknow in the past few quarters.