Startups are expected to lease about 29 million sq feet between 2022 to 2024, a 1.3 times increase from the 2019-2021 period, according to the joint report by Colliers and CRE titled Startups Scale Up’.
The demand is expected to be led by fintech and logistics startups as they have gained momentum post pandemic due to increased digital adoption and e-commerce boom, and hold a healthy pipeline in potential unicorns list. In addition to this, availability of a deep talent pool, favourable government policies and funding options from venture capitalists are steering growth of startups.
“Increased entrepreneurship and rapid growth of startups has been one of the most remarkable trends in Indian office space. Startups are the fastest growing occupier group among other occupier groups, and currently occupy 10 per cent of the office space. This has created numerous opportunities for office space providers to rethink and reposition their workplace offerings to attract diverse set of occupiers. As startups pick up pace, landlords need to consider the business life cycle and work preferences of the startups to capture the real estate demand from startups to drive more value,” said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.
“About 30 million sq ft office space in India is occupied by co-working or flex players. We believe a large share of this is occupied by start-ups. Therefore, anecdotally, start-ups currently occupy more than 49.7 million sq ft. Our internal forecasts peg the start-ups occupancy to be about 78 million sq ft of office space + 20-22 million sq ft in flex spaces by 2024, totalling about 100 mn sq ft by 2024. Within this start-ups segment, the fintech niche aces all others as the leader in terms of number of start-ups, occupied office spaces and growth. We anticipate other sectors such as ed-tech, logistics, healthtech, proptech to catch-up soon,” said, Abhishek Kiran Gupta, CEO and Co-founder, CRE Matrix.
Bengaluru top startup hub
Further, Bengaluru remains the top startup hub with a 34 per cent leasing share during 2019-21, with Koramangala, HSR and Indiranagar being the preferred locations for startups. A well-developed ecosystem, deep technology talent, and a culture of entrepreneurship are said to be major factors attracting startups here.
Delhi-NCR is amongst the fastest-growing market in terms of leasing by startups and witnessed a three-fold increase in leasing by startups during 2021 on a y-o-y basis. Mumbai too has seen certain pockets of startup activity over the years. However, relatively higher rentals, and high cost of living are often seen as deterrents by early-stage companies. Emerging hubs such as Jaipur, Ahmedabad, Indore, Coimbatore are also likely to witness rise in flex space and startup occupancy as entrepreneurs are increasingly leveraging these locations to launch operations.
Last three years have seen significant activity in leasing by startups. Continuing this momentum, startups are likely to occupy 78 million sq feet of office space by 2024, accounting for 13 per cent share from a mere 2 per cent share in 2010. As of 2021, while global companies continue to dominate Indian office space occupying more than 60 per cent, growth of startups has been highest, currently occupying a sizeable share of 10 per cent.