Why managed offices are attracting enterprise clients

India's office space market rebounded in the first half of 2024. According to real estate consulting firm CBRE, office leasing touched 32.8 million sq ft from January to June this year, rising 14% year on year across nine cities of India. Flex offices contributed significantly to this growth.  

The flex space market is projected to reach $9 billion by 2028, with 126 million sq ft of coworking space, according to a report by investment banking firm Avendus Capital. 

Managed offices, a popular flex option, align with enterprise’s focus on flexibility, cost control, and employee engagement. 

Changing dynamics of the Indian workplace

The Indian workplace has undergone a dramatic transformation since the pandemic, with remote work driving a surge in demand for flexible work arrangements. Managed offices have emerged as a compelling solution as companies embrace hybrid work models. Traditional, static workspaces are being replaced by adaptable environments that cater to diverse workforce needs. 

India’s large talent pool and cost-effective operations make the country a prime location for global capability centres (GCCs). These centres are increasingly opting for flexible office spaces to accommodate fluctuating staffing requirements. As GCCs expand, the demand for flexible workspace solutions will intensify, reshaping the commercial real estate landscape across India.

Also Read

Future of work: Why companies should look at the right flexible policies

How managed offices are redefining the Indian workplace

India’s corporate world is witnessing a paradigm shift as managed offices gain traction among large enterprises. 

This trend is driven by several compelling factors:

Financial advantages

• Reduced overheads: Elimination of property taxes, utilities, and maintenance costs
• Flexible leasing: Ability to scale office space according to business needs

Operational excellence

• Core business focus: Outsourcing office management allows enterprises to concentrate on primary functions
• Enhanced productivity: State-of-the-art infrastructure and ergonomic design boost employee efficiency
• Premium amenities: Access to shared facilities fosters collaboration and improves morale

Agility and growth

• Rapid market entry: Quick establishment of presence in new locations
• Effortless downsizing: Easy reduction of office space without significant penalties

Talent management

• Modern workspaces: Contemporary environments appeal to young professionals
• Prime locations: Prestigious addresses enhance company image and attract top talent

Risk reduction

• Robust infrastructure: Reduced risk of equipment failures and security breaches
• Continuity assurance: Backup power and disaster recovery plans ensure uninterrupted operations

Environmental responsibility

• Sustainable practices: Alignment with corporate social responsibility goals

While traditional offices remain relevant, managed offices offer a compelling alternative for large enterprises.

Trends in managed office adoption

Sectors leading the shift 

Managed offices have gained significant traction across different industries, with technology, financial services, as well as consulting industries being the dominant ones. These industries, due to robust technological advances and the necessity for constant adaptability, are the pioneers of flex office. 

The tech community particularly benefits from flexibility and technological infrastructure as these managed offices allow scaling seats and altering the setup based on business requirements. Healthcare and manufacturing industries are also starting to leverage managed offices.

City-wise demand patterns 

Managed offices are gaining traction in major cities of India. Bengaluru, Mumbai, Hyderabad, Pune, Chennai, and Delhi NCR are leading the trend, with a surge in demand from enterprises and startups alike. 

Tier II cities, such as Ahmedabad, Jaipur, Lucknow, Chandigarh, Kochi, Indore and Pune, are also experiencing growth in managed office spaces. The availability of a skilled workforce and lower operational costs in these cities is driving enterprise expansion. 

This shift is creating new opportunities for office space providers to cater to diverse business needs.

Impact of remote work and hybrid models 

The change of direction towards remote work opportunities and hybrid work environments, since the COVID-19 pandemic, has boosted the usage of managed offices. 

Various enterprises suggest that company structures are evolving and managed offices would be their choice to handle needs of diverse workforce on flexible terms, when compared to conventional office structures. Some enterprises are opening up satellite offices in the suburbs of Tier II and III cities though managed office operators. 

Operators shifting focus

Managed offices are the new focus for coworking operators. Developers are partnering with managed office operators and, in some cases, starting their own brand to offer full-service solutions. 

According to According to Business Standard, CBRE,  there was had earlier witnessed a surge in annual leasing of office space for enterprises in Chennai from 6.2 million square feet in 2022 to 10 million square feet in 2023, and this is likely to continue rising. Tier I and II cities are both seeing strong demand.  

Rapid adoption of managed office solutions

When it comes to enterprise clients, managed offices offer advantages such as optimisation of costs, flexibility, improved employee satisfaction, and an upgraded technology environment. 

The progression towards managed office solutions is quickening in India since managed office solutions are empowering companies to adapt agile, scalable options in a complex, dynamic business environment. It is further predicted that the ground for managed offices will continue to rise and act as a key element in the corporate real estate segment in India.

The author is Co-founder, GoFloaters, a platform that provides on-demand workspaces.