What is the future of work(places)?

‘Workspaces as creative as you’ is the new mantra for flex space operators. With return to office picking pace, the future of workplaces will not just be surrounded by concrete walls but also aim to enhance the employee experience. According to a study on ‘how employees thrive’ by Harvard Business Review , employees that co-work, report levels of thriving, that approach an average of 6 on a 7-point scale. Importantly, this is at least a point higher than the average for employees who do their work out of regular offices.

Flex spaces, unlike traditional workspaces, emerged as well-engineered office spaces providing more flexibility and scope for innovation. The focus is on increasing the collaboration experience, mentorship opportunities, and talent retainment.?

As corporates adopt agile space strategies, the demand?for flex continues to grow - share of flex spaces in overall leasing increased from ~5% in 2017 to ~15% in Q2 2022. During H1 2022, flex spaces leased 3.5 mn sq ft of space in the top 6 cities of India, a four-fold rise when compared to the same period in 2021. With rising demand, the total flex space stock in metro and non-metro locations is expected to touch up to 60 mn sq feet by 2023.

The pandemic kick-started a new regime of work. Remote working, hybrid working, work from home and work from anywhere have become the buzzwords in the new normal. The hybrid working model has led to the de-densification of existing traditional office set ups. Occupiers are looking at distributed workspaces to provide their employees with the opportunity to work from locations closer to their home. The objective is to promote a work life balance for employees and enable time savings at the same time. This resultant increase in employee productivity eventually helps companies in achieving their goals.

In the next two years, occupiers approaching their lease expiry are likely to explore relocation options. Flexible working and distributed workspaces will be an important part of their commercial real estate strategy. This is likely to include one head office in the CBD or SBD, with multiple smaller offices near established residential markets. Flex spaces will be an important part of the hybrid work model, providing occupiers with flexible lease terms and enabling them to reduce capital expenditure.?

The pandemic has led to an increased focus on employee health and well-being. Occupiers are increasingly exploring new age smart buildings providing modern amenities that improve the operational efficiency. Balancing indoor air quality (IAQ) has become a priority post Covid-19. To keep up with the changing preferences, developers can provide higher (Minimum Efficiency Reporting Value) MERV filtration to improve IAQ. Ultraviolet (UV) technology can also be adopted to disinfect surfaces. In addition to these, technological enhancements to reduce touchpoints in office developments will ensure the safety and well-being of employees.?

The evolving preferences of office occupiers also presents an investment opportunity in the refurbishment of ageing office assets. There is a scope to upgrade ~100 mn sq ft of office space in the top six cities of India, with these assets being 15+ years old.

In addition to hybrid work and redesigned workspaces, Environment Social and Governance (ESG) compliance has become a priority for landlords and occupiers in the new normal. Net zero buildings and climate responsive developments are some of the ESG paradigms that occupiers prefer. Going forward, ESG-compliant workplaces will continue to find favour among employees and investors alike.

As occupiers make the shift towards being agile, developers and landlords need to take cognizance of the fact that the purpose as well as the perception of office spaces is changing.

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