Market Trends of India Flexible Office Space Industry
Increasing Number of Startups and Freelancers in the Country To Drive the Market
The Flexible Office Spaces, initially the go-to option for startups and freelancers, has 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 among 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 more than 28% of India's GDP. The current MSME employee base of 128 million is expected to grow to 170 million in the current year with renewed economic reforms by the government, including streamlining labor laws. Ensuring digital integrations & creating SME/MSME-friendly policies, the SME segment can no longer be overlooked by the business ecosystem in India.
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, they can concentrate on their fundamental business minus the hassle of managing real estate.
Office Space is Witnessing Growth in India
In India, the office sector is one of the fastest to recover from the impact of the pandemic, and the market in the top seven cities is expected to reach 1.2 billion square feet in seven years; based on current prices, it will be valued at USD 165 billion. Bengaluru was the preferred market for occupying office space, with a gross absorption of 3.2 million scalable areas during the first half of the calendar year 2022, followed by the national capital region at 2.1 million and Mumbai Metropolitan Region at 1.70 million.
In Q1, Pune held a 20% share of the gross rental volume, followed by Mumbai, Delhi-NCR, and Bengaluru with around 19%, 18%, and 14%, respectively.
In six cities, the gross leasing of office spaces increased by 53.3 million square feet in 2022, compared with 32.9 million square feet a year earlier due to better demand. These six cities are Delhi-NCR, Mumbai, Bengaluru, Hyderabad, Chennai, and Pune. According to the report, India's commercial real estate market is expected to generate approximately 39-33 million sqft of total leasing in 2023 under an optimistic scenario.
