Flexible Office Space to Reach 100 Million Sq Ft by 2026

New Delhi, Oct 1 (PTI) Flexible office space operators have a portfolio of 67 million sq ft of prime office space and the number is set to cross 100 million sq ft by 2026-end as they look to expand amid a rise in demand from corporates, according to a report.

Real estate consultant Vestian has noted in its latest report that flexible office market has "witnessed a demand shift post-pandemic from startups and SMEs to large conglomerates owing to flexibility and cost advantages".

This led to significant growth, which further contributed to the addition of 27 million sq ft of flexible office space to the total stock between 2020 and 2023, it added.

"Following this growth trajectory, total flex stock reached 67 million sq ft by the end of June 2024, registering an annual increase of 25 per cent. However, flex space still accounts for only 7.5 per cent of the total grade-A office stock spread across the country," Vestian said.

As office market continues to expand rapidly, the consultant forecast that flexible office space stock will cross the 100 million sq ft mark by the end of 2026.

Vestian CEO Shrinivas Rao said, "Indian flexible office space operators are geared up to fulfil the requirements of large conglomerates. They have added 1.84 lakh seats within a year, reaching close to 1 million as of H1 2024."

Around 48 per cent of the pan-India flex stock is green-certified and 78 per cent is in grade-A buildings to cater to environmentally conscious large MNCs, he added.

"Significant cost advantages, robust economic growth, urbanization, and stable demand from IT-ITeS companies and start-ups are the major demand drivers for flex spaces in the country," Rao said.

Vestian noted that the increased demand for flex spaces has led to strengthened financials.

As a result, flex operators are able to negotiate favourable terms with fund houses and banks amid robust revenue streams.

With strong revenue streams and ample funds, profitability is on the horizon as demand for flexible workspaces continues to remain high, the consultant said.

"Flex operators not only grew in number but also expanded geographically. While tier-1 cities are major markets for flex operators, tier-2 cities such as Ahmedabad, Jaipur, Kochi, Lucknow, and Chandigarh are also gaining traction on the back of improved connectivity due to nationwide infrastructure developments, affordable office rentals, and ample availability of skilled workforce," Rao said.

Vestian is an occupier-focused workplace solutions firm specialising in commercial, residential, industrial, retail and hospitality sectors. Headquartered at Chicago, Vestian has offices across the US, India, China, UK, Sri Lanka and the Middle East.