The absorption of flexible workspaces by both domestic and foreign enterprises is expected to reach new heights in 2024, with 106,554 seats already leased in the first half of the year, compared to 155,000 for the whole of 2023. The leasing activity in this sector has seen a compound annual growth rate (CAGR) of 35% since 2021.
A joint report by Cushman & Wakefield and Table Space revealed that the flexible workspace footprint across India?s top eight cities had reached 58 million square feet (MSF) by the first half of 2024, making up over 7-8% of the country?s total Grade A office supply. In the first six months of 2024, over 5 million square feet of flexible workspace supply was added, continuing the momentum from the past two years, which saw capacities grow by 8-9 MSF annually, with a growth rate of 23% in 2022 and 18% in 2023.
Ramita Arora, Managing Director of Bengaluru and Head-Flex, India, at Cushman & Wakefield, noted that the flex-space sector is one of the fastest-growing segments in commercial real estate, currently accounting for 13% of Grade A office leasing volume. Arora highlighted that over half a million flex seats have been consumed in the last five years, with occupiers increasingly seeking tailor-made office solutions.
The report also highlighted growing demand for flexible workspaces in Tier II and III cities, driven by workforce decentralisation and a focus on work-life balance. Flexible spaces now account for 11-13% of the total office space demand across the country.
The report pointed out a transition towards the Managed Office Solutions (MOS) model, both from operators and occupiers. This model provides enterprises with a range of customised service offerings, allowing them to control all aspects of their office environment, while also benefiting from shorter lease tenures and technological advancements that boost workplace productivity. The shift in leasing strategies is being driven by companies looking to attract and retain talent in a competitive market and by the growing trend of returning to office spaces.
Nitish Bhasin, Chief Sales Officer at Table Space, noted that the report underscored the significant role of MOS as a key growth driver in the flexible workspace sector. Between 2021 and the first half of 2024, there has also been a sharp increase in the number of active flex space operators, rising to 300, with small and mid-sized operators capturing a larger market share. However, the top 5% of these operators command over 50% of Grade A flexible workspace stock, with most offering Managed Office Solutions as their core service.
