The Rise of Flex Space in India

India’s operational flexible office space (flex stock) is poised for significant growth, projected to double in size to 106 million sq ft over the next five years. Currently, operational flex stock in the country stands at 53 million sq ft across the top seven cities, providing approximately 839,250 seats. This accounts for an overall office stock penetration level of about 4.7%, as per a report by JLL and Smartworks.

Enterprise Adoption on the Rise

Enterprises of all sizes and across various industry segments are increasingly embracing flexible office spaces. The space occupied by enterprises has seen a remarkable growth of 3.2 times from FY2021 to FY2023, reaching unprecedented levels. Moreover, enterprise seat uptake in FY2023 has surpassed the combined numbers from the previous two financial years, indicating a significant surge in demand for flexible office solutions. Bengaluru, Pune, and Delhi NCR have emerged as the dominant markets, collectively accounting for around 60% of all enterprise seats during the past three financial years.

Start-up Surge in Flex Space

Indian start-ups have notably increased their uptake of flexible office spaces, ranking second only to the technology sector. In FY2023, start-ups accounted for a substantial 31% share, reflecting a growing preference for flexible office solutions among emerging businesses. These solutions offer cost-effectiveness, convenient locations, flexible lease terms, and modern work environments, making them attractive to start-ups from diverse sectors such as manufacturing, BFSI, and consulting.

City Dynamics in Flex Space

Bengaluru has consistently led the flexible office space market since 2018, followed closely by Delhi NCR. Hyderabad and Pune have surpassed Mumbai to become cities with the next highest flex stock among the top seven cities. Pune witnessed the highest compounded annual growth rate (CAGR) of 49% since 2018, followed by Hyderabad at 40%. Chennai and Delhi NCR also experienced significant growth, with a CAGR of 30% each, underscoring the evolving landscape of flexible workspace solutions.

Demand for Large Flex Spaces

Bengaluru, Pune, Delhi NCR, and Mumbai have emerged as the top cities for large flexible office space deals, accounting for 75-80% of deals comprising over 500 seats. Large enterprises are driving demand for managed solutions, particularly those with over 500 seats. Conversely, for smaller deal sizes of less than 100 seats, Delhi NCR and Chennai dominate the market, catering to the specific needs of smaller businesses or organizations.

The trajectory of flex space adoption in India reflects the changing preferences and evolving needs of businesses, signaling a shift towards more agile and adaptable workspace solutions.