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Hyderabad with 4.5 million sq.ft. of the total flex space stock land is one among the fastest growing markets in the country, according to a recently launched report by JLL, Reimagine Flexspaces A 360 degree view.
The demand for flexible spaces in large cities such as Hyderabad is likely to grow, with businesses having a greater need to accommodate portfolio expansion and contraction along with crisis support. This indicates the inherent growth potential of the flex office market in India.
The flex space market in Hyderabad saw major traction from mid-2018 and peaked in 2019. Flex spaces accounted for 28 per cent of total office space leasing in 2019 in the city. While flex spaces enjoys popularity among start-ups and small-sized companies, there has been an increased traction amongst large BFSI and IT-ITeS occupiers mainly as managed office spaces as well as incubation spaces. This supports the significant expansion by flex space operators in the city during the last 2-3 years.
As per the recent report by JLL, strong signs of recovery were witnessed in the Hyderabad office market in Q3 2020 with a healthy gross leasing at 1.9 million sq.ft. At the same time, net absorption grew by 31 per cent from the previous quarter to 1.5 million sq.ft. in Q3 2020.
The flex space market is forecast to grow at a slower pace and more organically. Irrespective of several short-term disruptions, increased demand from large enterprises, will support the growth to more than 50 million sq.ft. by 2023.
It is anticipated that flexible space will grow by an average of around 15-20 per cent per annum over the next three-to-four years, although this trajectory will not be linear.
“While the flex-space market more than tripled in the last 3 years, the momentum going ahead will be relatively slower. Players are likely to tread cautiously, and the overall market is expected to expand 1.5 times from the current size. At the same time, demand for flexible space is likely to remain resilient and we expect the size of the market to cross 50 million sq. ft. by 2023, led by increased demand from larger enterprises,” Samantak Das, Chief Economist and Head of Research & REIS, JLL India.
In the commercial real estate space, flex spaces have become synonymous with adaptability. The entry of over 300 flex space operators helped commoditise the market. Despite the massive disruption from the impact of COVID-19, the future of flexible workspaces will remain optimistic.
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