Occupancy Levels Soar Above 80% Across Major Markets

Mumbai, September 25, 2024: A new report from Knight Frank India, titled Flexing the Future: Assessing the Readiness of Flex Spaces for Evolving Commercial Real Estate Demands, reveals that flex workspaces are experiencing exceptional demand, with occupancy rates exceeding 80% in all major office markets. Notable cities like Mumbai (94%), NCR (92%), Bengaluru (86%), and Hyderabad (84%) are leading the charge, highlighting a significant shift towards flexible office solutions among corporations.

Significant Growth in Flex Space Leasing

The report indicates that flex-space operators have leased an impressive 52.9 million square feet (msf) from 2017 to H1 2024, achieving a robust compound annual growth rate (CAGR) of 22%. In the first half of 2024 alone, operators leased 7.17 msf, marking a 6% increase from the same period last year. This surge accounts for over 21% of total commercial real estate transactions, showcasing a strong market preference for flexible workspaces.

Key Drivers of Demand: IT and Beyond

The Information Technology sector remains the primary driver for flex spaces, spurred by the need for scalability and collaboration, particularly in tech hubs like Pune and Bengaluru. Additionally, sectors such as manufacturing and professional services are increasingly recognizing the advantages of flexible office solutions, further diversifying the tenant mix in these spaces.

Investment Trends Highlight Market Potential

Since 2017, flexible office spaces have attracted approximately $820 million in private equity investment. This influx underscores the growing confidence in the flex workspace model, which is not only appealing to tech firms but also to traditional sectors seeking adaptability and efficiency.

Emerging Markets on the Rise

The report also identifies Tier 2 cities—Coimbatore, Jaipur, Nagpur, and Mysuru—as promising locations for flex space expansion. With a significant number of operators planning to broaden their footprints in these areas over the next 36 months, the future of flexible workspaces appears bright.

Looking Ahead: The Future of Workspaces

Shishir Baijal, Chairman and Managing Director of Knight Frank India, emphasized the resilience and innovative spirit of India’s commercial real estate market. “Occupiers are now prioritizing employee well-being and environmental sustainability, and flexible workspace operators are well-equipped to meet these evolving demands,” he stated. As the market continues to evolve, flexible office solutions are set to play a crucial role in shaping the future of work environments across India.