Explosive Progress in Commercial Real-estate in 2022: A Shift to Flex Areas
Wiki Article
The year 2022 marked an unimaginable milestone in the realm of commercial real-estate, revealing an astonishing office absorption rate that reached 50.8 million sq. feet. according to industry reports. This figure is not only greater than the pre-pandemic average of the 5 years that preceded it (2015-2019) by 3.1% However, it also stands as the second-highest level of absorption in the last 10 years which is just behind the 2019 numbers. The increase in office occupancy, brought on by the return of work across different industries doesn't just boost the absorption of net workers but also paints a picture of market stability and a hopeful future.
The Rise of Flex Spaces: A Paradigm Shift in Workspaces
In response to evolving business needs and portfolio strategies, there's been a clear demand for flexible, agile, and modern workspaces. The shift to flexibility in businesses has led areas that are flexible into the spotlight as the most preferred option among the occupiers. In the past year, we have witnessed significant shifts in businesses towards flexible workspaces, motivated by the imperative of diversifying portfolios and catering to the demands of employees' current needs.
Harsh Binani, Co-Founder of Smartworks, India's largest enterprise-focused workspace provider, expressed overwhelming optimism regarding his commercial real estate market's development. He highlighted the exponential increase of flex spaces within the commercial realm, Harsh Binani highlighting the rapid growth of flex spaces. Binani anticipated a significant phase of growth, anticipating significant expansion Harsh Binani and consolidation by large operators in the industry of flex in the coming five years.
Benefits Fueling the Flex Market Growth
The broad adoption of flex spaces across sectors underscores their numerous advantages. Major factors behind the rapid growth of flex space include real estate cost optimization scaling, flexible lease tenures, strategies for talent, fully managed services and an appeal to modern amenities and workplaces. Binani further emphasized this view by affirming "Flex is the new way of working," by citing the strong trend of leasing among large and small enterprises, which comprise a majority or more of their assets.
Growth Trajectory and Market Predictions
The flex space industry, rising from recessionary market conditions is now seeing an explosion in growth. Experts in the field predict the same ascending trend, anticipating a double-digit rate of growth in 2023. The hybrid office model is anticipated to remain the preferred option for office users through 2023, thereby securing markets for flex spaces. The predictions suggest that flex spaces' market share will climb to 4.2% by 2023, and there are industry plans to double the size of the space in the next two or three years.
The Future Outlook
The demand for flexible and well-equipped work environments, the flex space segment is projected to grow by a significant amount. The shift in workspaces and portfolio strategies will continue to fuel the rise in the demand for flexible, fluid, and modern workspaces across various sectors and companies.