Demand for flex realty upbeat even as overall sales dip in Q12023: Colliers

Demand for flex real estate spaces remains firm as buyers continue to mix their overall real estate purchases in a bid to control costs while providing conveniences to work for their employees.

Flex space, also known as flexible space, is typically a segment of real estate that provides customers with flexible office space based on their needs. Startups are increasingly preferring such real estate setups.

Leasing by flex space sellers in January-March 2023 inched closer to that of technology companies for the first time ever, according to a report by Nasdaq-listed multinational investment management company Colliers.

Flex occupiers leased 2.1 million square feet of space during the first quarter of 2023, accounting for 20 per cent, a few paces behind the technology sector's share at 22 per cent and together both segments accounted for nearly 42 per cent of the total leasing across top metros, the Colliers report revealed.

"Large technology occupiers have also been leasing spaces in flex spaces due to their added benefits such as flexible lease terms, lower capex and modern workplace designs. This coupled with ongoing recessionary conditions and layoffs in the technology sector has led to a relative pushback in conventional leasing by these occupiers," it said.

Bengaluru and Delhi-NCR were the most preferred locations for top flex operators for their expansion. Bengaluru accounted for nearly half of the total flex leasing during the quarter, followed by Delhi-NCR at 30 per cent share, the report said.

"Share of the technology sector has declined steadily from 34 per cent in Q1 2022 to 22 per cent in Q1 2023, as corporates continue to focus on building in operational efficiencies through a hybrid model. While Hybrid working has impacted demand for conventional office spaces, it has also fueled demand for flex spaces across top markets. As long-term growth drivers for tech sector remain strong in India, the technology sector will continue to drive office leasing activity through a mix of conventional and flex spaces," says Peush Jain, Managing Director, Office services, India, Colliers.

Overall, the year 2023 has started on a cautious note registering a 19 per cent yearly decline in leasing activity across the top six Indian cities at 10.1 million square feet during the first quarter, according to the report.

"On a sequential basis leasing continued to drop, indicating delayed decision-making by occupiers amidst continued economic uncertainties," it said.

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