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India’s flex space stock is projected to touch 80 million sq ft by 2026, forming 9–10 per cent of the total Grade A office stock of the country, according to Colliers’ report.
Currently, flex space stock across the top six cities stands at 43.5 million square feet. This is relatively higher compared to the 3–4 cent flex space market penetration in other key markets within APAC.
Moreover, the office market clearly indicates a higher affinity for shared work spaces. A positive economic outlook, evolving workplace trends, and increasing diversification of the occupier base will continue to drive flex space demand across the top markets in the country, the report noted.
“Flex leasing in the country has gathered significant momentum in recent years, reaching an all-time high of 7 million square feet in 2022. This spurt in flex activity continued in 2023 as well, reinforcing the gradual shift in the way businesses are realigning their real estate portfolio decisions,” said Arpit Mehrotra, Managing Director, South India, Office Services & Head of Flex, Colliers India.
Micro-markets
Similar to the overall India office market, the flex market is also highly concentrated in certain prominent clusters across the Tier-I cities. The top 10 flex micro-markets such as ORR-Bengaluru, SBD-Bengaluru, SBD-Hyderabad, Andheri East-Mumbai, Baner Balewadi-Pune, and others, house almost 60 per cent of the total flex stock of the country.
Bengaluru remains the largest flex space market, housing 1/3rd of the total flex stock of the country, followed by Delhi-NCR. In addition, prominent tech hubs such as Pune and Hyderabad are also witnessing increased traction and are expected to grow at a faster pace owing to rising demand from large technology occupiers.
Owing to their strategic location, superior connectivity to other parts of the city, and strong physical and social infrastructure, secondary business districts (SBDs) remain the most active flex markets within cities, accounting for more than half of the flex stock of the country.
Similarly, peripheral markets are also among the fast-emerging flex market hotspots owing to comparatively lower price points, upgradation of infrastructure, and improving connectivity within the city. As occupiers look to decentralize their office portfolios to enable a distributed workforce strategy, PBDs are poised to witness a significant upswing in the next few years.
PBDs are rapidly gaining traction as an affordable and viable alternative for flex spaces, accounting for a significant 27 per cent share of the flex space portfolio. “Furthermore, the emerging trend of decentralization in office portfolios, with off-shoot offices in PBDs, is poised to drive heightened activity in these micromarkets,” said Vimal Nadar, Senior Director and Head of Research, Colliers India.
According to the report, CBDs, which were the primary hubs for flex spaces, have seen limited activity in recent years due to the scarce availability of new-age Grade A workplaces and relatively high rentals.
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