MUMBAI — The occupancy levels of flexible office spaces in India has crossed 80 per cent across major locations as IT companies drive the demand, a report said on Wednesday.
Prime office locations such as Mumbai (94 per cent), NCR (92 per cent), Bengaluru (86 per cent) and Hyderabad (84 per cent) continue to attract corporations, driving greater demand for flexible office spaces, according to the report by Knight Frank India.
To meet this demand, flex-space operators have significantly increased their office space take-up, leasing an estimated 52.9 million square feet from 2017 to the first half this year, with a robust CAGR of 22 per cent.
In January–June period, flexible workspace operators leased 7.17 msf, a 6 per cent increase compared with H1 2023. This accounted for over 21 per cent of total commercial real estate transactions.
“With GDP growth projections for FY25 reaffirming India as the fastest-growing major economy, the demand for innovative office spaces is soaring,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
Occupiers are now looking beyond basic amenities to focus on employee well-being, and flexible office space operators are well-positioned to meet these evolving demands, he added.
Managed offices now constitute 65 per cent of the flexible workspace market, while co-working spaces account for the remaining 35 per cent.
Coimbatore, Jaipur, Nagpur and Mysuru are the top choices for tier 2 cities for expansion, said the report.
The IT sector dominates the flex space industry, driven by the need for scalability, flexible lease terms, and a collaborative environment fostering innovation, particularly in tech hubs like Pune, Hyderabad, and Bengaluru.
The other services sector, including professional services, digital marketing, tourism, and creative industries, also has a strong presence in cities like Chennai and NCR.
The BFSI sector, while less dominant, favours flex spaces in financial hubs like Ahmedabad and Mumbai.
Manufacturing firms are increasingly utilising flexible workspaces for their administrative and managerial operations, particularly in cities with a strong industrial base, the report mentioned.