Co-working Spaces Jump to Second Place in Office Leasing in India for Q1 2024

In an unprecedented shift within the office leasing landscape, flexible space operators have ascended to become the second-largest sector in office space leasing during the January to March quarter of 2024. This surge is attributed to the sector's effort to meet the increasing demands from global corporations.

CBRE's data reveals that out of the total 14.4 million sq ft leased in the fourth quarter of FY 2024, the tech sector led with 26%, closely followed by flexible space operators with 22%. Remarkably, the 3 million sq ft leased by flexible space operators marks the sector's highest quarterly uptake.

Quality Office Spaces in High Demand

Anshuman Magazine, CBRE's Chairman & CEO for India, South-East Asia, the Middle East & Africa, mentioned that occupiers are increasingly focusing on securing high-quality office spaces to support their expansion and consolidation efforts. He highlighted India's skilled workforce and robust business ecosystem as key factors contributing to a positive outlook for the office sector.

India Leads in Flexible Office Growth

India has rapidly become the world's fastest-growing market for flexible office spaces, with the sector expected to see further momentum. This growth is fueled by varied demand from large enterprises, a thriving start-up ecosystem, and Global Capability Centres (GCCs) expanding their R&D operations within the country.

Flexibility and Agility Drive Growth

Rajat Kapur, the Regional Managing Director for North India & UAE at The Executive Centre, attributed the sector's exponential growth to the flexibility and agility that shared workspaces offer. He pointed out that the rise of remote work and the gig economy is pushing businesses towards flexible solutions that can adapt to changing space requirements.

Hybrid Work Models Boost Flexible Spaces

With hybrid work models gaining popularity, the demand for flexible spaces is expected to continue driving the sector's growth well into the future. Other significant contributors to office space leasing included the engineering and manufacturing (E&M) and banking, financial services, and insurance (BFSI) sectors, accounting for 13% and 12% of the total leasing, respectively.

Managed Co-working Spaces Gain Preference

Amal Mishra, Co-founder of UrbanVault, noted a growing trend towards managed co-working and flexible spaces. This preference allows companies to reduce capital expenditures while enjoying efficient management and operational ease.

Domestic Firms Lead Leasing Activity

Similar to previous quarters, domestic firms dominated the leasing activity, making up 48% of the total in the first quarter of 2024, primarily driven by flexible space operators, technology firms, and BFSI corporates. In the technology sector, software and services took up 95% of the space, underscoring the sector's dominance.

GCCs Make a Significant Mark

Global Capability Centres accounted for a third of the overall office leasing in India from January to March 2024. Within this, E&M companies made up over a quarter of the GCCs' space uptake, followed by automobile firms.

Major Cities Lead, While Chennai and Pune Rise

Ram Chandnani, Managing Director of Advisory & Transactions Services at CBRE India, predicted that office activity would be concentrated in major cities like Bangalore, Mumbai, Hyderabad, and Delhi-NCR. However, he anticipated that cities like Chennai and Pune would experience a surge in leasing activity and development completions, continuing the momentum from 2023.