Flexible office space operators command 22% share in Indian office leasing

Flex space dominance: In India's bustling real estate sector, flexible office space operators have secured the second-largest sector position, capturing a notable 22 per cent share in overall office leasing across nine key cities, according to a CBRE report. Other prominent sectors contributing to leasing activity included Engineering and Manufacturing (E&M) and Banking, Financial Services, and Insurance (BFSI) firms.

The report underlines the consistent growth of flexible office space leasing over the past five years, reflecting an upward trajectory in the sector's prominence. 

Diverse demand drivers

It anticipates this growth trend to continue, driven by increasing demand from various segments such as large enterprises, startups, and Global Capability Centres (GCCs) establishing their R&D operations in India. The rise of hybrid work models further fuels the demand for flexible office spaces, promising continued growth in the sector.

In terms of city-wise leasing activity, Bangalore led the pack, followed by Delhi-NCR and Hyderabad, which together accounted for 65 per cent of total leasing activity. The report also highlighted the dominance of small to medium-sized transactions, comprising 81 per cent of office space take-up in Q1 2024.

India's competitive edge

Anshuman Magazine, Chairperson & CEO of CBRE India, expressed optimism about the office sector's outlook, citing India's inherent advantages, such as a skilled workforce and well-established business ecosystem. 

“During 2024, occupiers would prioritise high-quality office space as they continue to facilitate portfolio expansion and consolidation. India's inherent advantages, such as its skilled workforce and well-established business ecosystem, continue to hold appeal, leading to a positive outlook for the office sector,” Magazine said.

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, stressed the dynamic transformation in India's office market driven by economic growth and strategic policies, attracting a wider range of industries.

“At a city level, office activity would be concentrated in major cities such as Bangalore, Mumbai, Hyderabad, and Delhi-NCR. However, higher confidence and availability of talent are expected to propel cities such as Chennai and Pune to witness an upsurge in both leasing activity and development," Chandnani said.

"Global firms are expected to expand their presence by setting up or expanding existing GCCs. Similarly, domestic firms would expand and solidify their presence, strengthened by a period of financial buoyancy and a well-capitalised financial system,” Chandnani added.

Sustainable office pipeline

Looking ahead, the report forecasts continued demand from GCCs, expecting a 20 per cent increase in their presence by 2025. It also anticipates a robust pipeline of high-quality office space entering the market, with an emphasis on sustainability and employee-centric features.