Flex Space Demand in India Set to Reach Unprecedented Heights in 2024

Surge in Flex Space Leasing Signals Record Year

New Delhi: The demand for flexible working spaces by companies is projected to hit a new peak in 2024. Already, 106,554 seats have been leased in the first half of the year, compared to 155,000 seats for the entire year of 2023. This rapid growth in leasing is attributed to factors such as economic expansion, evolving work dynamics, and the need for companies to manage costs effectively. The sector has been experiencing a compounded annual growth rate of 35% since 2021.

Expanding Flex Space Footprint Across Major Cities

A recent report highlighted that the footprint of flexible workspaces across India’s top eight cities reached 58 million square feet (MSF) by the first half of 2024. This accounts for over 7-8% of the total Grade A office supply in the country. The first half of 2024 alone saw the addition of more than 5 million square feet of flexible space, continuing the growth momentum observed in the previous two years. Specifically, capacities expanded by 8-9 MSF each year, with a growth rate of 23% in 2022 and 18% in 2023.

Flex Space: A Major Player in Commercial Real Estate

The flexible workspace sector has emerged as one of the fastest-growing segments in commercial real estate, accounting for 13% of the Grade A office leasing volume. Over the last five years, more than half a million flexible seats have been consumed, marking a significant shift as occupiers increasingly seek customized office solutions. Ramita Arora, Managing Director of Bengaluru and Head-Flex, India at Cushman & Wakefield, emphasized this trend as a key driver of the sector’s growth.

Rising Demand in Tier-II and Tier-III Cities

The demand for flexible workspaces is also increasing in tier-II and tier-III cities, driven by workforce decentralization and a growing emphasis on work-life balance. Flexible spaces now represent 11-13% of the total office space demand across the nation.

Shift Towards Managed Office Solutions (MOS)

Both operators and occupiers are transitioning towards the Managed Office Solutions (MOS) model. This model offers enterprises a comprehensive suite of customized services tailored to their needs, allowing them to control all aspects of their workplaces. The MOS model is appealing due to its shorter lease tenures, which provide flexibility, and the incorporation of technological advancements that enhance workplace productivity.

Data Summary:

Seats Leased in H1 2024: 106,554

Seats Leased in 2023: 155,000

Annual Growth Rate (since 2021): 35%

Flexible Workspace Footprint (H1 2024): 58

MSF Percentage of Grade A Office Supply: 7-8%

Flex Space Capacity Growth:

2022: 23% (8-9 MSF added)

2023: 18% (8-9 MSF added)

Flex Space Share in Grade A Leasing Volume: 13%

Flex Space Share in Total Office Space Demand: 11-13%