New Delhi, Sep 1 (PTI) Flexible workplace segment, which is growing at a rapid pace in India, may see a major consolidation from next year as bigger operators will look to acquire smaller ones for inorganic growth, according to property consultant Colliers.
It projected that leasing by flexible workspace operators will hit a record 8.8 million sq ft in 2019 across seven major cities Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune markets.
The leasing is expected to account for about 18-20 per cent of total gross leasing of office space.
In 2018, leasing by flexible workspace operators stood at 6.8 million sq ft and accounted for 14 per cent of total commercial office leasing.
“We believe consolidation will garner pace from 2020, as larger flexible workspace operators with financial discipline acquire smaller companies for inorganic growth, and to enter new locations and acquire scale,” Colliers said in a report.
The acquisition would help bigger players to offer seats across various price-points, providing greater options to occupiers, the consultant said.
“We already observe consolidation beginning in the market, with Indian hospitality chain OYO acquiring Innov8, a Gurgaon-based flexible workspace company,in July 2019,” the report said.
Colliers also expects that flexible workplace segment would continue to attract investments with many key operators in talks with institutional investors for funding.
In India, the consultant said that there are around 300 flexible workspace operators in India.
The total stock of flexible workplace is around 17 million sq ft, which is around 3.5 per cent of total commercial real estate stock.
Bengaluru leads Indian flexible workspace stock with around 6 million sq ft. NCR has the second-largest stock with 19 per cent followed by Mumbai with 17 per cent share.
“Flexible workspace market in India is transitioning to a higher level of services, reflecting demand from enterprise occupiers for more customized spaces and bespoke services,” the report said.
To cater to the rising demand from enterprises, flexible workspace operators are leasing larger spaces.
The average size of a flexible workspace has increased 40 per cent over two years to 55,000 sq feet in 2019, as operators take up large spaces and even entire buildings.
“As operators chase large enterprise demand, we note that flexible workspace operators are using a hybrid model to offer flexible workspace options as well as managed office spaces, wherein they offer customised office space solutions to occupiers,” the report said.
Colliers advised flexible workspaces operators to invest in technology to provide services beyond requests like cashless payments and seat booking, among others, to differentiate themselves in this highly competitive segment. PTI MJH