Approx. 80% of occupiers in India prioritize physical offices, expressing the

Approx. 80% of occupiers in India prioritize physical offices, expressing the desire to bring employees back to the office – CBRE’s India Future of Office Survey 2021

88% of survey respondents believe business conditions are currently improving in India

 

CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the findings of its ‘India Future of Office Survey 2021’- conducted between September and November this year. CBRE reached out to close to 100 occupiers, with a combined employee base of over 100,000 in India. This included both global and domestic corporates from key sectors including technology, BFSI, engineering & manufacturing, infrastructure, real estate & logistics, research, consulting & analytics, and pharmaceuticals/healthcare.

The survey observed that with the importance of physical offices intact, the need for workplace flexibility and safety would drive new behaviors across occupiers, developers, and investors. Senior business leaders have expressed a strong desire to bring employees back to the office with about 80% of them prioritizing physical offices; but several of them are also willing to offer a greater degree of flexibility and choice. The survey highlighted that about 58% of respondents in India plan to implement policies allowing office-based working with the option of working from home.

 

Post the second wave, occupiers are striving to encourage employees to come back to offices with their safety and well-being at the forefront of their ‘return to work’ plans. The survey highlighted three areas that require tech enhancement to facilitate return to work - admin, FM services and amenities, along with space tracking.

 

Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE said, “In CBRE’s view, despite an increased adoption of hybrid working during the pandemic, a wider adoption in the long-run seems unlikely. Even with the adoption of hybrid work, most companies expect employees to work in the office most of the time. This new shift in working patterns should be considered amidst occupiers’ intent to expand portfolios in India over the next two years.

 

We thus believe the adoption of hybrid working practices would have only a limited downside impact on future office demand in the medium to long term, particularly as space planning is undertaken based on long-term peak occupancy rates.”

 

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India said, “The current pandemic is accelerating changes in performance, expectations and role of the workplace. Successful and targeted strategies can envision a practically implementable ‘Future of Work Concept’, effectively leveraging potential changes in work styles and corresponding opportunities to rebalance the workplace.

 

Majority of the respondents were clear on the importance of the physical office across our India, APAC, and larger global markets. While the relevance of physical space is here to stay, the focus of business must be on the evolving purpose of office spaces.”

 

It is clear that despite so much focus on hybrid work during the pandemic, future real estate strategies would not favor a fully remote or in-office workforce. Rather, strategies are expected to support choices, end-user experiences and actions that allow employees to integrate life and work.

 

“The nature of the workplace has completely evolved over the past two years. The adoption of hybrid work is likely to require companies to enhance their workplace strategies to deliver seamless and engaging experiences. The successful adoption of hybrid work within a company would require defining where work can be accomplished, what work requires in-person collaboration to accomplish and who benefits most from spending time in the office.”, added Ram Chandnani.

 

Another key CRE area identified by the survey is the growing importance of Environmental, Social and Governance (ESG). Nearly 60% of respondents to CBRE’s 2021 Global Investor Intentions Survey Report stated they have already adopted ESG criteria as part of their investment strategies.

 

Key Future Office Trends

Hybrid working:

• Business leaders have a strong desire to bring employees back to the office but at the same time are willing to offer a greater degree of flexibility and choice.
• Several organizations are currently conducting pilot studies into the feasibility of hybrid working before they commit to large-scale implementation.
• Most companies would offer frequent or infrequent hybrid working options to mainly 25% of the workforce in India in the long run.
• CBRE cites that clear guidelines should govern hybrid work eligibility and approvals. Going forward, this governance would be more stringent in India as compared to other APAC regions.

Portfolio growth and agility:

• Physical office is still a requirement for most employees. Hence, most occupiers intend to expand portfolios over the next two years.
• New ‘core+flex’ strategies are emerging amidst portfolio expansion and hybrid working.
• Increased use of flexible spaces and consolidation are top short-term portfolio strategies.
• As the flexible space industry continues to evolve to meet occupier requirements, a broader offering, ranging from on-demand meeting space to customized private suites, is becoming available.

Workplace strategies:

• Workplace strategies are being fundamentally reset to allow for a more hybrid workforce by adding collaborative and tech-enhanced spaces.

• About half of the respondents would increase their staff-to-desk-sharing ratios in the next two years.
• Targeted mobility and activity-based working would be top seating preferences.
• The financial obligations, compliance, employee engagement and liability considerations of a hybrid work program must be weighed.

The future role of the office

• The advent of hybrid working would change the future role of the office as a center for employee collaboration.
• The future role of the office is evolving to ensure the safety, wellness, productivity and engagement of a more distributed workforce.
• The workplace would be more effective for employee engagement, collaboration and team productivity.
• Health & wellness and safety continue to be key priorities for occupiers in India as a majority of the respondents would be implementing more touchless technologies as well as HVAC solutions.

CBRE India | Quote on the proposed amendments for

CBRE India | Quote on the proposed amendments for the new e-commerce rules issued by government

Amendment by the government to tighten the rules for e-commerce marketplaces in India, please find below the quote from Mr. Anshuman Magazine, Chairman & CEO, India, South-East Asia, Middle East & Africa, CBRE for your kind consideration.

“While we await the policy’s finer print, we can expect the initiatives to drive greater transparency for end customers. While certain actions may drive boost to government’s ‘Make in India’ initiative, we can be sure that customer is once again the ‘king’ – with more access to diverse options. 

Overall, we can expect the policy to take in to consideration the interest of all players, and open avenues for the growth of the sector.”

India’s 36 Mn sq.ft. flexible space segment to grow by

         India’s 36 Mn sq.ft. flexible space segment to grow by
                10-15% (y-o-y) in the next three years

 

• CBRE shares outlook on the evolving Flex space segment from Occupiers, Landlords as well as Operators
• Fluidity of the workplace, portfolio agility, and hub & Spoke models to be the future growth drivers for the flexible space industry
• Tier 2 and 3 markets to witness an increase in flex demand owing to the increased focus on Distributed Working and Work from Anywhere models being adopted by enterprise clients in the near future

 

CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the details of its report ‘The Future is Flex’ that highlights emerging trends and future expectations in India’s flexible space segment.  On the back of the hybrid space demand, expansion across cities & sustained funding, CBRE expects India’s flexible stock to grow by 10-15% (y-o-y) from the current 36 Mn sq.ft in the next three years.

 

The report highlights that as of Q1,2021, Bangalore holds a Flex stock  of 11.6 Mn sq. ft. which is the maximum in the country, followed by Delhi-NCR at 6.6 Mn sq. ft and Hyderbad at 5.7 Mn sq. ft. While these cities, along with Mumbai will continue to see further demand, Flex demand in cities like Pune and Chennai are also expected to see growth in the coming years. In 2020 alone, over 75,000 seats were leased in Flex spaces across India.

 

Additionally, with an expanded range of flexible space options, and increased focus on hybrid working models by enterprise clients,  Tier 2 and 3 markets are also expected to witness an increase in Flex demand. Tier 2 activity is expected to be dominated mostly by domestic operators during the next couple of years.

 

The report deep dives into the stakeholders’ view on the flexible space segment along with highlighting the brand's capabilities under advisory and transaction for all stakeholders. Below are some key highlights:

 

OPERATORS VIEW: Post the mass vaccination, Work from Anywhere (WFA) / hybrid working will be a big focus for most businesses. Operators performance will be based on the following:

• Sustained occupancies on the back of managed / ‘enterprise’ coworking/hybrid space demand
• Thoughtful network expansion across cities
• Sustained funding for financially sound players

 

In way forward, operators will prioritize expansion with a focus on efficiency:

• New arenas for sustenance and growth: Focus on improving tenant profile and profitability in operational centers through further amenitization, tech enhancement, and layout changes
• Higher focus on customized solutions: Emphasis on higher flexibility and innovative solutions/deal structures such as reverse officing, fit-outs as a service, pay-per-use models, all access products,etc. among others
• ‘Creative’ partnerships with landlords: Landlords would consider undertaking partnerships or management agreements with operators post the COVID-19 outbreak and are likely to be more open to structuring portfolio tie-ups

 

OCCUPIERS VIEW:  In way forward, occupiers will focus on:

• PORTFOLIO ‘RE-OPTIMISATION’: Now integral to medium-to-long-term, cost-effective, and ‘core + flex’ strategies for inculcating Work From Anywhere (WFA) adoption if required
• LOCATION STRATEGIES: Possible dispersion towards multiple locations within/among cities via hub-and-spoke models in line with WFA
• AUGMENTED PREFERENCE TOWARDS AGILITY: Occupiers would display an increased inclination towards agility/flexibility to meet RE requirements

 

LANDLORDS VIEW: Landlords may consider getting into ‘strategic’ partnerships with operators or creating their own brands to cater to the demand for flex spaces in their portfolio

• HOTELISATION OF OFFICE SPACE: To improve their product offering, landlords may want flexible spaces as part of their buildings along with an increased focus on ‘amenitization’ for F&B, living/convenience, meetings/events, and wellness
• ‘CREATIVE’ PARTNERSHIPS WITH FLEX OPERATORS: Landlords partnerships or management agreements with operators may become more common in the post COVID-19 period/era. We may also witness portfolio tie ups between landlords operators going forward
• VALUATION OF OFFICE SPACE: Landlords may strive to find the optimum share of flexible spaces as part of their portfolios with an eye on valuations

 

Commenting on the announcement, Mr. Anshuman Magazine, Chairman, India & South-East Asia, Middle East & Africa, CBRE, said “The pandemic influenced the way businesses function, and their overall strategies. Businesses are evaluating new working models that keep workplace flexibility at the centre, balancing employee benefits and business profitability. These models will not only ensure flexible working, but also ensure employee safety once offices resume normal operations. The demand for physical office spaces will continue to rise as employee look forward to normal work days; with mass vaccination propelling further sectoral growth.”

 

Commenting on the same, Mr. Ram Chandnani, Managing Director, Advisory & Transactions Services, India said, “We are witnessing an accelerated change in performance, expectations, and role of the workplace. Firms have been successful in changing their strategies to ensure seamless functioning, while effectively leveraging potential changes in work styles. While for many the work from home culture may continue, the demand for physical workspaces is expected to be driven by flex offerings.”

 

FUTURE GROWTH DRIVERS FOR THE FLEXIBLE SPACE INDUSTRY In India

 

1. FLUIDITY OF THE WORKFORCE To tackle the uncertainty of headcount projections/ Phased growth+ mobile teams/ Temporary workforce
2. PORTFOLIO RE-OPTIMISATION In line with new ‘core+flex’ strategies and location agnosticism through WFA policies
3. HUB-AND-SPOKE MODELS: For opening satellite offices/locations + reducing employee commute time
4. ENHANCED FINANCIAL STRUCTURING: Risk mitigation via short-term stop-gap measures (including incubation spaces) + capital-light deal structures for medium-to-long-term savings
5. INCREASED FLEXIBILITY OF DEAL STRUCTURES for portfolio agility via flexibility of deal structures
6. RISING NUMBER OF ‘STRATEGIC’ PARTNERSHIPS / ACQUISITIONS between ‘investor – operator’ / ‘landlord – operator’/ ‘occupier – operator’
7. CAUTIOUS EXPANSION BY OPERATORS: Further expansion by operators within tier I and towards tier-II cities in the medium to long term

With today’s announcement, RBI focused on the revival of

                                Mr. Anshuman Magazine, Chairman & CEO, India,
                South-East Asia, Middle East & Africa, CBRE for your kind consideration

“With today’s announcement, RBI focused on the revival of the Indian economy by adding adequate liquidity that ensures further stability of the overall market in the current scenario. The COVID loan scheme will boost economic activity and aid the growth of the MSME’s sector as well. 

The announcement of restructuring of loans for small borrowers is a proactive move as it will provide some relief against asset downgrade and also provide relief to lenders. Liquidity support to the healthcare sector is also a commendable step. These decisions by the central bank to tackle the current situation are much appreciated and well-timed to ensure stability and economic revival.”