India's flex stock to cross 80 mn sq ft by 2026, Bengaluru tops chart

India’s flexible or flex space stock is expected to touch 80 million square feet by 2026 in the Asia-Pacific region, constituting 9-10 per cent of the country's total Grade A office stock, according to a latest Colliers report. This phenomenon is expected due to the change in workplace dynamics of the occupiers in tier-1 as well as tier-2 and tier-3 cities.

The latest Colliers report titled 'Shared Office Spaces in India – Flexing Ahead' was released at FICCI’s 2nd edition of Commercial and Industrial Real Estate Conclave in Bengaluru. India’s flex space market has grown stronger after the Covid-19 pandemic. Flex space stock across the top 6 cities has almost doubled since 2019.

"Flex leasing in India has gathered significant momentum in recent years, reaching an all-time high of 7 million square feet in 2022. This spurt in flex activity continued in 2023 as well, reinforcing the gradual shift in the way businesses are realigning their real estate portfolio decisions. By the end of 2023, flex space leasing is estimated to constitute an impressive 15-20 percent of overall office leasing and this is noteworthy. This only reiterates the evolving needs of businesses that place greater emphasis on agility and flexibility in today’s dynamic work environment," said Arpit Mehrotra, managing director, South India, Office Services & Head of Flex, Colliers India.

Over the 6 cities covered by Colliers - Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune – cumulative shared office space currently stands at 43.5 million square feet, 6.3 per cent of the total Grade A office stock. The recent Indian flex space market penetration data is higher compared to 3-4 per cent penetration in other key markets within the APAC region.

Among the 6 Indian cities, Bengaluru proved to be the home for co-working office spaces with one third of the total flex stock of the country at 14.7 million square feet of flex stock and 7.5 per cent of flex penetration. In Bengaluru, the average flex rental per seat per month in the post-pandemic period (2022-2023) stands between Rs 19,000 to Rs 27,000 compared to Rs 8,000 to Rs 13,000 in the pre-pandemic times.

"Bengaluru with a one-third share dominates flex space leasing similar to the overall office leasing market," said Mehrotra.

Following Bengaluru, Delhi-NCR also showed an uptick in flex-working spaces accounting for 7.4 million square feet of flex stock and a 5.7 per cent flex penetration rate, as of 2023. Prominent tech hubs such as Pune and Hyderabad are also witnessing increased traction and are expected to grow rapidly owing to rising demand from large technology occupiers. Interestingly, Pune currently has the highest flex space penetration rate at 8.9 per cent.

Like the India office market, the flex market is highly concentrated in certain prominent clusters across the tier-1 cities constituting almost 60 per cent of the total flex stock of the country.

Central business districts, which were the primary hubs for flex spaces, have seen limited activity in recent years due to scarce availability of new-age Grade A workplaces and relatively high rentals. Peripheral markets, on the other hand, are fast emerging as flex market hotspots owing to comparatively lower price points, upgradation of infrastructure, and improving connectivity within the city.

"As businesses embrace a distributed workforce strategy, peripheral business districts (PBDs) are fast emerging as influential clusters of flex space activity in India. Basis their strategic locations, superior connectivity, and cost-effectiveness, PBDs are rapidly gaining traction as an affordable and viable alternative for flex spaces, accounting for a significant 27 per cent share flex space portfolio. Furthermore, an emerging trend of decentralization in office portfolios, with off-shoot offices in PBDs is poised to drive heightened activity in these micro markets," said Vimal Nadar, senior director and head of Research, Colliers India.

Cumulative seat uptake has crossed 250,000 since 2020, witnessing a 6-fold growth in 2023. Driven by flexibility, agility, and cost-effectiveness, flex spaces are becoming an integral part of occupiers’ portfolios, with its share in occupiers' total portfolio rising to an estimated 10-12 per cent in 2023, from 5-8 per cent before the pandemic in 2019.  

Not only technology companies, but the demand for flex space is getting more diversified with all occupier categories, including non-tech firms such as engineering and manufacturing, BFSI, and consulting adopting flex spaces. There has been an increased flex space taken up from non-enterprise clientele including domestic startups and new-age companies as well.

City	Flex Stock (in mn sq ft)

 Flex Penetration (%)

Bengaluru              

14.7                                   

 7.5%

Chennai                

3.0                                   

 3.9%

Delhi NCR              

7.4                                  

 5.7%

Hyderabad             

6.1                                       

 6.0%

Mumbai                  

6.4                                        

 5.3%

Pune                      

5.9                                    

 8.9%

Pan India 

43.5  

 6.3%