Businesses Embrace Flexibility: Over 60% of Companies Seek Flex Spaces

Awfis, India’s largest network of coworking spaces, announces the release of its report titled "Workspace Next”. The report provides valuable insights into the demands and preferences of organizations across various sectors and sizes. It sheds light on the changing landscape of office spaces in the wake of the hybrid work revolution.

The Awfis nationwide mixers provided a platform for key decision-makers across varied industries to come together and share their insights on evolving workplace trends. Real Estate & Facilities Leaders from major cities like Mumbai, Bengaluru, Chennai, Delhi NCR, Kolkata, and Pune participated in these mixers, engaging in in-depth conversations about post-pandemic workplace strategies.

According to the report, a significant 63% of companies across different sizes have adopted flexible solutions to varying extents. This demonstrates that flexibility has become a fundamental aspect of workplace solutions for organizations of all sizes. As the workforce increasingly values flexibility in their work arrangements, organizations are recognizing the need to provide the same level of flexibility to meet employee expectations.

The report also explores the impact of the hybrid work model on workspace requirements. It highlights the changing demand for traditional office spaces among larger organizations, as they seek to optimize their real estate portfolios. At the same time, smaller organizations are shown to exhibit resilience and have unique needs that are addressed through flexible workspace solutions.

Source: Awfis

Amit Ramani, Founder & CEO of Awfis, said, "As one of the leading companies in the flexible workspace industry in India, we have been actively involved in the workplace transformation. This transformation has been further accelerated by the COVID-19 pandemic and the changing preferences of employees regarding their work arrangements. Awfis, being home to the largest community of professionals in India, has had the advantage of closely observing and understanding the rapidly evolving work styles. Through our report, we have also been able to gather valuable insights into changing occupier preferences and have gained a comprehensive understanding of the evolving commercial real estate (CRE) landscape through our network of partners across India."

"The evolution of work has brought about significant changes, driven by technology, remote work, and evolving employee expectations. Businesses are re-evaluating their use of office spaces, and the demand for flexible options is skyrocketing. This report is a product of comprehensive surveys conducted both offline and online, targeting occupiers from various company sizes and industries. The survey aimed to understand the evolving usage and patterns of office space as well as emerging workspace models. By leveraging these findings and insights, we hope to assist businesses in making informed decisions about their office space requirements and contribute to a more sustainable future for all," said Sumit Lakhani, Deputy CEO of Awfis.

WORKPACE NEXT REPORT HIGHLIGHTS AND TRENDS

FLEX IN THE PORTFOLIO

• The IT/ITeS, New Tech & BPM sector is a prominent catalyst for flexible space demand and consistently represents a significant proportion of respondents with varying degrees of flex adoption in their real estate portfolios
• Overall, 63% of the respondents reported adopting flex in their real estate portfolios as the repercussions of the pandemic have compelled occupiers to pause and reassess their real estate footprint, leading them to develop resilient and forward-thinking strategies for the future
• Among smaller organizations with fewer than 500 employees, 53% reported having flex-dominant portfolios. In contrast, larger organizations with over 1,000 employees primarily had flex accounting for less than 25% of their portfolio share. These findings suggest that organizations of different sizes and industries are embracing flexible space solutions to varying degrees in their real estate portfolios, with smaller organizations showing a higher adoption of flexible spaces

WHERE ARE YOU USING FLEX?

• 46% of respondents incorporated flex spaces for their primary office locations, indicating a significant acceptance of distributed office strategies, even for head offices that typically operate on traditional leases
• 77% of respondents embraced flexible solutions for their branch offices, showcasing a higher preference for flex for subsidiary locations.
• 37% of respondents reported deploying flex across both head office and branch offices, indicating a balanced approach to workspace strategies
• While most industries still rely on traditional leases for their head offices, the BFSI, Engineering & Manufacturing, and IT/ITeS, New Tech, BPM sectors had a fair share of respondents who opted for fully flexible solutions for their head offices. This suggests a growing trend of incorporating flexibility in even the primary office locations, driven by industries that recognize the benefits of distributed and adaptable workspaces
• While traditional leases still dominate in head offices, the implementation of flex spaces in both head offices and branch offices demonstrates a growing acceptance of hybrid workspace models and the benefits they offer in terms of agility and efficiency.

WHY FLEX?

In the context of adopting a hybrid work model, where employees have the choice to work remotely and from the office, companies are increasingly recognizing the value of flexible workspaces. 73% of the respondents identified cost-effectiveness as the most crucial factor when considering flexible workspaces

• Regardless of industry and organization size, employee productivity was ranked as a significant factor influencing the adoption of flex. As hybrid work gains significance, companies recognize the need to support employee productivity in both remote and office environments
• Location as a factor was considered the least significant among the respondents. It suggests that companies are exploring locations beyond central business districts (CBDs) and are open to operating in prime micro-markets as part of their flexible workspace strategies. Respondents emphasized the importance of easy scalability when considering flexible workspaces. This indicates that companies value the ability to adjust their workspace requirements based on fluctuating headcounts and evolving business needs.

ME V/S WE SPACE

• To operate efficiently, modern offices need to strike the right balance between "Me" and "We" spaces, catering to the individual productivity and collaborative needs of employees. 47% of the respondents favored more personal working space (Me space). This preference was particularly prominent in sectors such as IT/ITeS, New Tech, BPM, Consulting, and Engineering & Manufacturing, where focused work is essential

30% of the respondents indicated an equal distribution between personal working space and collaboration space (Me space and We space). Sectors including BFSI, Telecom Media & Marketing, Engineering & Manufacturing, and BPM displayed a preference for more collaborative space (We space).

• Larger organizations with over 5,000 employees showed a preference for more collaborative space, emphasizing the importance of fostering collaboration and teamwork in organizations of such scale
• The data highlights the diverse preferences regarding the ideal ratio of personal working space and collaboration space in different industries and organization sizes. It underscores the need for organizations to consider the nature of work and the collaboration requirements of their employees when designing office spaces to promote productivity and collaboration effectively.

EXPANDING HORIZONS: EXPLORING TIER-2

• • The report explores the growing interest in Tier-2 cities for office expansions. It uncovers the benefits that these cities offer, including cost-effectiveness and access to a wider talent pool. The report highlights the most preferred Tier-2 cities and the sectors that are driving this trend, providing valuable information for organizations considering expansion into these cities
• Among the respondents surveyed, 47% expressed their intention to establish a presence in Tier-2 cities. Within this group, the IT/ITeS, New Tech, and BPM sector accounted for a significant 20% share. Furthermore, of the respondents intending to expand in Tier-2 cities, 56% represented small organizations with fewer than 500 employees

THE WAY FORWARD

• The data showcases the divergent approaches organizations are taking in response to hybrid working. While some are streamlining their real estate portfolios through downsizing, others recognize the need for additional space to support their evolving needs

• 53% of the respondents reported downsizing their real estate portfolios. This indicates a strategic approach to optimize space utilization as organizations no longer need to accommodate their entire workforce in the office simultaneously under the hybrid work model. Downsizing allows for cost savings and more efficient use of office space
• On the other hand, 27% of the respondents expressed the future need for additional space. This demand for space primarily came from sectors such as IT/ITeS, New Tech, BPM, Telecom, Media, and Marketing. These industries foresee the need for expanded workspace, potentially driven by growth, collaborative work requirements, or other factors specific to their operations.
• Personal workspaces are highly valued in the office environment for increased concentration and productivity, while larger organizations focus on communal spaces for collaboration.
• Tier-2 cities have emerged as attractive options for corporate expansion due to their cost-effectiveness in terms of lower real estate and operational costs, along with access to a diverse talent pool. These cities have witnessed infrastructure development, including improved transportation and connectivity, making them more accessible for businesses. For employees, Tier-2 cities offer benefits such as a better work-life balance, lower rental costs, proximity to home, and shorter commute times
• The evolving nature of work, the need for cost optimization, the desire for adaptable work environments, and the focus on employee satisfaction contribute to the enduring appeal of flexible office spaces. As companies continue to embrace flexible schedules and seek dynamic workspace solutions, flexible office spaces have become an integral part of the modern work landscape, extending beyond their traditional use for branch offices and implementation purposes