Flexible office spaces in India could be a $9B opportunity by 2028: Avendus
As of 2023, a total of 1,67,700 seats were leased in flex spaces across India. As per the report, about 61 million sq ft space is available in the flex space format with over 6,80,000 operational seats.
Offering cost-effective solutions, scalable flexibility, and collaborative environments, flexible co-working spaces (flex workplaces or office spaces) have emerged as the preferred choice for cash-strapped yet agile startups aiming to minimise overhead costs, as per a report.
This surging demand is poised to transform flex office spaces into a $9 billion opportunity in India by 2028, more than doubling the current opportunity of $3.5 billion, according to a market report by Avendus Capital.
Flex workplaces are particularly thriving in India. Data indicates that the average net absorption of flex spaces in Indian cities, totalling 45.4 million sq ft, surpasses the combined average of major Asian cities like Shanghai, Beijing, Tokyo, Singapore, Sydney, and Hong Kong.
"The Indian office market has remained largely immune to global macro and sectoral headwinds. As more enterprises explore the remote workplace policy, we are seeing a broad shift towards flexible and modern office solutions," said Prateek Jhawar, Managing Director and Head, Infrastructure and Real Assets Investment Banking, Avendus Capital.
"With demand being robust, the biggest challenge for flex workspace operators could turn out to be locking in quality real estate supply in the central business districts of the top seven cities at favourable rents. We expect at least four mature players to list in the next 2-3 years," Jhawar added.
Flexible workspaces are versatile environments that can adjust to different work preferences and requirements. These spaces are known for their ability to be tailored, cost-effectiveness, readiness for technology, and provision of shared resources and facilities.
They serve businesses of all sizes: startups find them cost-effective and adaptable, mid-sized companies use them during moves or growth periods, and large corporations establish extra collaborative spaces beyond their main offices.
As of 2023, a total of 1,67,700 seats were leased in flex spaces across India. As per the Avendus report, there is currently about 61 million sq ft of space available in the flex space format with over 6,80,000 operational seats.
Flex workspaces are predominantly concentrated in metro cities. Approximately 49% of the total operational flex workspaces in Tier I cities are managed by mid to large-sized operators, while Tier II cities account for about 22% of the total operational centres in India.
Leading the charge is Bengaluru, boasting a total flex space availability of 20.2 million sq ft. Surprisingly, Pune, with 6.1 million sq ft available, has a higher penetration of flex spaces compared with Mumbai, which stands at 5.7 million sq ft.
WeWork India, housing approximately 91,000 desks in a total space of around 7.0 million sq ft, stands as one of the largest flex space providers alongside Smartworks, which offers around 110,000 desks in the same space. However, WeWork India leads in revenue among flex space providers in India, with Rs 14,228 million, double the Rs 7,441 million revenues generated by Smartworks.
is among the most expensive options, with the average pricing per desk ranging from Rs 18,000–22,000. However, it falls slightly below The Executive Center, funded by KKR, which charges Rs 25,000 – 30,000 per desk.
Edited by Affirunisa Kankudti