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Technology companies dominate the occupancy of flex spaces in the country, accounting for 50 percent of the total flex space utilization across the top cities, including Chennai, Delhi-NCR, Pune, and Hyderabad, according to a report by Colliers.
Other major sectors that are actively embracing hybrid working through flex include engineering and manufacturing and BFSI. In larger markets such as Mumbai and Bengaluru, demand by BFSI and engineering occupiers for flex space is almost at par with that of technology occupiers.
Going forward, demand from technology occupiers will continue to remain strong in the next two years, led by a strong recovery and robust hiring plans as businesses continue to focus on rationalising costs, said the report.
As of Q1 2023, India’s flex space penetration rate is at 6.5 per cent and continues to grow steadily because of factors such as occupiers embracing hybrid and decentralised work strategies, aiming to create modern work environments at an optimal cost.
Occupiers in India have been quick to adopt flex spaces, attracted by the flexibility, agility, and cost-effectiveness they offer. Flex spaces are becoming an integral part of occupiers’ portfolios, with their share in occupiers’ total portfolios rising to 10–12 per cent in 2023 compared to 5-8 per cent before the pandemic in 2019, as per interactions with industry experts.
Going forward, flex spaces will continue to see strong growth as they continue to support occupiers in realigning their portfolios and space considerations to suit a hybrid working style while leveraging technology and sustainability to improve efficiency and the employee experience.
“As compared to shorter lease tenures of 1-2 years pre-pandemic, occupiers are now going for longer commitments of 3-5 years with flex space operators as they look to integrate flex space as a long-term solution. During 2022, leasing by flex space operators touched 7 million square feet across the top six cities, the highest in any year. This was a 46 per cent YoY increase led by prominent IT hubs such as Bengaluru and Pune,” said Peush Jain, Managing Director, Office Services, India.
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