Flex office operators eye IPOs as MNCs, GCCs demand grade-A spaces

In the first quarter of 2025 (Q1 2025), the flex office segment continued to grow, with flex space leasing rising by 22 per cent to 2.2 million square feet (msf), according to Colliers

India’s flexible (flex) office segment, having breached pre-pandemic levels, is thriving as corporates, startups, multinational corporations, and global capability centres (GCCs) expand in India, seeking low-capital yet Grade A plug-and-play facilities.

 

In the first quarter (Q1) of 2025, the flex office segment continued to grow, with flex space leasing rising by 22 per cent to 2.2 million square feet (msf), according to Colliers.

 

Delhi-National Capital Region, Pune, and Bengaluru accounted for 80 per cent of total flex space uptake. JLL estimates that the operational footprint of flex space across India’s top seven cities will surpass 100 msf by 2026, up from the current stock of over 74 msf.

 

On the back of this growth potential, several flex operators — including Smartworks Coworking Space, Tablespace, IndiQube, BHIVE Workspace, Simpliwork, and WeWork — are gearing up for their respective initial public offerings (IPOs), reflecting the segment’s maturity.

 

“With a robust pipeline of IPOs, strong occupancy rates, and considerable private equity backing, the flex space has solidified its position as a long-term player in India’s commercial real estate,” said Samantak Das, chief economist and head of research and real estate intelligence services, India, JLL.

 

Awfis Space Solutions’ IPO of ₹598.93 crore in 2024 was India’s first listing from the flex office segment. The IPO was oversubscribed, reflecting investor confidence.

 

Bengaluru-based Tablespace is reportedly planning a high-value IPO this year, while Gurugram-based Stylework has set a 2028 timeline for a public listing.

 

While WeWork’s IPO has been put on hold by the Securities and Exchange Board of India, the upbeat market sentiment is pushing players like 315Work Avenue to raise ₹400 crore.

 

“They are making a 25-30 per cent margin of earnings before interest, tax, depreciation, and amortisation, and growth is strong. Vacancy levels are not too high, so corporations are signing up and upgrading from low-grade to Grade A buildings. The operators are also expanding rapidly. This industry has transformed over the past five years,” said Vijay Agrawal, managing director (MD) — investment banking, Equirus.

 

Industry experts believe operators are leveraging demand to consolidate their market position, using funds from IPOs to expand operations and forge partnerships with developers.

 

“Strategic use of funds will further drive market expansion, technological advancements, and operational efficiency,” said Amit Ramani, chairman and MD, Awfis. 

 

What’s driving flex operators’ growth?

 

Flex offices offer competitive rents and flex lease tenures, including short-term rental options for days, weeks, months, or years. This has attracted corporates looking to optimise costs while maintaining their real estate footprint.

 

Flex operators handle administration and maintenance costs while providing shared amenities such as WiFi, printers, conference rooms, caféterias, and Grade A office space. This setup gives tenants both financial and operational agility, as they pay only for what they use.

 

“Today, corporates don't want to deal with administrative and maintenance headaches. They’re not even investing in in-house cafeterias, while flex operators offer highly competitive rental rates, helping corporates save costs,” Agrawal said.

 

According to JLL, flex operators leased 10.4 msf of office space in 2019, accounting for 17.7 per cent of total office leasing. This figure has since crossed pre-pandemic levels, reaching 15.3 msf in 2024 and making up nearly 20 per cent of overall office leasing in India.

 

Utkarsh Kawatra, senior director at myHQ by Anarock, estimates that India’s co-working and flex office market will grow at a compound annual growth rate of 13 per cent.

 

“Startups and smaller companies are embracing flex workspaces because they offer operational agility, shorter lease terms, and are far more cost-effective than traditional office leasing models,” Kawatra said.

 

“India’s English-speaking and technology talent pool has made it an attractive destination for multinational corporations to set up offshore research and development and back offices, also known as global capability centres (GCCs),” said Karan Chopra, joint chief executive officer (CEO), Tablespace.

 

Colliers estimates that GCCs will account for 40 per cent of the demand for Grade A office space in India over the next few years.

 

Multinationals like Microsoft are also leasing space through flex operators. According to Awfis’ Ramani, large enterprises increasingly use flex spaces for satellite offices and distributed teams.

 

Sanjay Dutt, MD and CEO of Tata Realty and Infrastructure, said, “While corporates will continue to lease permanent spaces from developers, inefficiencies in their business models and challenges in forecasting business sentiment make short-term investments in co-working and flex spaces highly advantageous.”

 

Challenges and headwinds

 

Despite the growth trajectory, the flex office segment faces challenges, including securing Grade A office spaces in top-tier cities and maintaining occupancy levels amid rising real estate costs in metros.

 

“The availability of Grade A office spaces in metro cities remains a major challenge. The imbalance between supply and demand makes securing premium, high-quality spaces in prime locations increasingly competitive,” said Manish Khedia, MD, West, South India, and Sri Lanka, The Executive Centre.

 

Navigating regulatory requirements, such as the Real Estate (Regulation and Development) Act, 2016 —particularly approval delays — along with keeping pace with evolving technologies and geopolitical tensions that could impact foreign investments, are additional concerns.

 

Broader macroeconomic challenges such as economic slowdowns, inflation-driven operating cost increases, and a persistent demand-supply mismatch in the office sector further complicate growth.

 

In 2024, India recorded office transactions of 71.9 msf, while new supply stood at 50.3 msf, according to Knight Frank. In Q1 of 2025, supply remained lower than absorption. Colliers reported that new supply stood at 9.9 msf, down marginally by 1 per cent year-on-year (Y-o-Y), while absorption rose to 15.9 msf, up 15 per cent Y-o-Y.