Flexible workspace operators bullish on growth, raise equity: Report

Flexible office space providers are bullish on demand for managed workspace during 2025 as corporates look for agile and cost-effective solutions to reduce overheads.

Many flexible workspace operators are expected to hit capital markets this year to raise funds for the expansion of their businesses.

The overall gross leasing of office spaces across major seven cities hit an all-time high in 2024.

The gross leasing of office space rose 19 per cent to a record 885.2 lakh square feet across eight major cities, according to Cushman & Wakefield.

Flexible office space operators rented substantial space from real estate developers and property owners for renting out to small, medium and large enterprises.

Bengaluru-based operator Simpliwork Offices CEO and Founder Kunal Walia said the company will keep expanding its portfolio across major cities to meet the rising demand for flexible workspaces.

"Companies are increasingly seeking agile, cost-effective solutions to adapt to the evolving work culture, particularly with the continued rise of hybrid work models," Walia added.

According to Vestian, flexible office space operators have a portfolio of 670 lakh sq ft of prime office space and the number is set to cross 1,000 lakh sq ft by 2026-end.

Nikhil Madan, Co-Founder of NCR-based The Office Pass, anticipates another year of robust demand for flexible spaces in 2025, continuing with the momentum of last year.

"The shift towards hybrid work models, coupled with businesses' desire for agility and cost efficiency, will continue to drive the need for adaptable, amenity-rich work environments," Madan said.

Shesh Rao Paplikar, Founder & CEO of BHIVE Workspaces, said the co-working and managed workspaces industry is likely to continue its growth path in 2025 led by the sustained rise of the startup ecosystem, growing adoption of flexible workspaces for accelerating business growth and greater exposure by multinational corporations.

"The abolition of angel tax in the last union budget and policy incentives for the startup industry has played a pivotal role in making the co-working industry even more attractive, thereby fueling its expansion across the country," he added.

Paplikar said he is quite bullish on the prospects of the industry this year.

Kirthi Chilukuri, Founder & Managing Director of Stonecraft Group, and Founder of Office Pods@ Banjara Hills, remains optimistic about sustaining the demand momentum.

"With hybrid work models becoming the norm and businesses demanding flexible and scalable office solutions, we anticipate continued growth and innovation in the coworking space," Chilukuri said.

Urban Vault Founder Amal Mishra said the Global Capability Centres (GCCs) have become major demand drivers for office space.

Urban Vault is entering into Gurugram, expanding its footprint from Bengaluru.

Manas Mehrotra, Founder of 315Work Avenue, noted that the coworking industry has become more relevant than ever with the demand surging significantly in recent times owing to its affordable pricing options and flexible work culture.

C Prabhakar, Director of Bengaluru-based firm Gopalan Enterprises, said, the co-working segment will see further expansion in 2025.

"The growing appeal of co-working workspaces lies in the SLA-supported (Service Level Agreement) lease terms, along with the full spectrum of amenities and services that cater to startups and established businesses alike," said Prabhakar.

Ashish Sharma, AVP Operation of Realty firm Brahma Group, said, "Companies of all sizes are realising the benefits of co-working spaces' agility, creativity, and sense of community."  Businesses no longer need large, long-term leases but prefer the flexibility to scale up or down as needed, opined Walia of Simpliwork Offices.