India’s Flexible Office Spaces Market Projected to Reach $9 Billion by 2028: Avendus Report

• ByStartupStory     |    March 22, 2024

In a landscape marked by evolving work preferences and the rise of agile startups, flexible co-working spaces are poised to become a $9 billion opportunity in India by 2028, according to a market report by Avendus Capital. Offering cost-effective solutions, scalable flexibility, and collaborative environments, flex workplaces have emerged as the preferred choice for cash-strapped yet dynamic startups aiming to minimize overhead costs.

The report highlights that the surging demand for flexible office spaces is transforming India’s real estate landscape rapidly. The average net absorption of flex spaces in Indian cities, totaling 45.4 million sq ft, surpasses the combined average of major Asian cities like Shanghai, Beijing, Tokyo, Singapore, Sydney, and Hong Kong.

Prateek Jhawar, Managing Director and Head, Infrastructure and Real Assets Investment Banking, Avendus Capital, commented, “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.”

Jhawar also pointed out a potential challenge for flex workspace operators, stating, “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 favorable rents. We expect at least four mature players to list in the next 2-3 years.”

Flex workspaces are versatile environments that can adjust to different work preferences and requirements. They are known for their ability to be tailored, cost-effectiveness, readiness for technology, and provision of shared resources and facilities. These spaces cater to businesses of all sizes, with startups finding them cost-effective and adaptable, mid-sized companies using them during moves or growth periods, and large corporations establishing extra collaborative spaces beyond their main offices.

As of 2023, a total of 1,67,700 seats were leased in flex spaces across India. The Avendus report indicates that 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, with Bengaluru leading the charge with a total flex space availability of 20.2 million sq ft.

WeWork India and Smartworks emerge as leading flex space providers in the country. WeWork India, housing approximately 91,000 desks in a total space of around 7.0 million sq ft, leads in revenue among flex space providers in India, generating Rs 14,228 million in revenue. Smartworks offers around 110,000 desks in the same space, generating Rs 7,441 million in revenue.

WeWork India 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.

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