India Flexible Office Space Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

India Flexible Office Space Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

India's Flexible Office Space Market is expected to grow at a CAGR of approximately 6% during the forecast period (2022-2027).

The outbreak of covid-19 leading to the government-mandated social distancing norms coupled with the nationwide lockdowns has impacted severely on workspace requirements, space management techniques as well as design guidelines for various flexible workspace operators. However, while a few short-term repercussions are inevitable, the long-term fundamentals of the sector remain sound and strong.

Flex space operators have changed the face of commercial real estate with their innovative offerings. this market is projected to grow at a steady pace throughout 2021 and beyond. Resultantly, the market penetration of flex spaces into total office space is likely to see a gradual increase from the current 3% to 4.2% by 2023. This growth is to continue, driven by demand, profitability, and return profile for investors, albeit at a slower pace resulting from the impact of COVID-19.

Developments that initially drove the growth of the flex market, like the focus on utilizing workplaces to boost productivity and drive dynamic work cultures, enhance emphasis on employee health, etc., will continue to influence the next phase in India.

At present, Bengaluru and Delhi NCR together account for more than 50% of the flexible office space stock in India, with Bengaluru housing around 10.6 million ssq ft of such spaces. Hyderabad with 4.5 million sq ft and Mumbai with 4.3 million sq ft of flexible office stock follow.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 1.5 times the current size. At the same time, demand for flexible space is likely to remain resilient and it is expected that the size of the flex space market to cross 50 million sq it by 2023 led by increased demand from larger enterprises.

The Flexible Office Spaces which was initially the go-to option for startups and freelancers has now become a prerequisite for SMEs. The biggest chunk of 10.3 million potential seats is ascribed to large companies. There is a qual divide of 1.5 million each amongst freelancers and SMEs.

Small and Medium Enterprises have been growing rapidly with over 63 million SMEs in the country currently rising at an average rate of 10%. SMEs contribute 45% of India's manufacturing output and ad to more than 28% of India's GDP. The current MSME employee base of 128 mn is expected to grow to 170 mn by the Current Year 2022. With renewed economic reforms by the government comprising of streamlining of labor laws. Ensuring digital integrations & creating SME/MSME-friendly policies, the SME segment cannot be overlooked by the business ecosystem in India any longer.

The smallest lot is formed by startups at 100,000 seats. With a substantial shift from traditional offices to flexible workspaces attaining widespread acceptance, more and more SMEs are embracing coworking due to cost efficiency. flexibility, teach integrations, superior infrastructure, enhanced productivity plug and play solutions, and networking opportunities. Thus, allowing them to concentrate on their fundamental business minus the hassle of managing real estate.

India is one of the fastest-growing markets for office spaces in the world, driven by rising demand for office rentals, emerging flexible office spaces, and growing start-ups & IT Sectors in the country. In the first six months of 2021, the new supply of office spaces in India reached 25.11 million square feet, an increase of 75% year on year, across major cities (Delhi-NCR, Mumbai, Bengaluru, Pune, Hyderabad, and Chennai), due to improved confidence of realty companies for recovery of the workspace demand.

The rapid pace of the vaccination drive backed by a reducing number of COVID-19 cases is driving investor confidence in quick economic recovery. Developers are also confident of a solid recovery in office leasing activity, with the gradual unlocking activities and employer's shift in office premises for riding demand for flexible office spaces.

In the first six months of 2021, Bengaluru recorded twice the growth in the supply of new office space, increasing to 9.53 million sq. ft. in January 2021, from 3.35 million sq. ft. in 2020. Delhi-NCR recorded 35% year-on-year growth, from 3.88 million sq. ft. to 5.23 million sq. ft. The new office supply in Hyderabad recorded a 3% year-on-year growth to 3.84 million sq, ft, The office supply in Mumbai more than doubled to 4.73 million sq. ft, from 2.29 million sq, ft. Pune recorded a 2x raise to 1.28 million sq. ft as against 0.6 million sq. ft between January 2020 and June 2020

The competitive landscape of the India Flexible Office space Market is observed to be fragmented with the presence of major international and domestic players in the country. The India Flexible Office Space Market observes high competition from the players. The technological developments in the market have made it easier for new players to enter the market. the companies in India Flexible Office Space Market are involved in several growth and expansion strategies, such as strategic partnerships, mergers, and acquisitions to gain a competitive advantage. Some of the major players are WeWork, Awfis, 91 Springboard, Redbrics, and Mumbai Co-working are among the others.

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