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The flexible office space market in India is poised for substantial expansion, with its stock projected to surge by 52 percent, reaching a total of 81 million square feet by the year 2025, as revealed in a comprehensive report by Vestian. Presently, flexible office operators are overseeing operations spanning 53.4 million square feet, and this figure is anticipated to experience a robust upswing over the next few years. According to the report, India currently boasts over 7.6 lakh seats offered by flexible space operators, strategically spread across a network of more than 1000 centres.
CEO of Vestian, Shrinivas Rao, elucidated that, in comparison to more established global markets like the United States and various European countries, India's flexible space sector is still in its nascent stage. Rao emphasized the steady progression this sector has made within India, with its current flexible office stock covering 53.4 million square feet. Furthermore, Vestian's analysis suggests that this stock is projected to escalate to a significant 81 million square feet by the year 2025, reflecting a commendable compound annual growth rate (CAGR) of 23 percent. Rao credited the catalysing effect of the COVID-19 pandemic for propelling the market's growth to its current trajectory.
The report underscored that the broader adoption of flexible spaces within India commenced in 2015-16, during a period when the market was characterized by fragmentation and a lack of organization. However, over time, it has experienced a rapid evolution, growing more structured and streamlined. Flex spaces have attracted substantial interest, not solely from start-ups and small to medium-sized enterprises (SMEs), but also from large corporations. Rao made an observation about the prevailing business climate, predicting that 2023 may prove to be a challenging year for businesses due to macroeconomic uncertainties and the looming threat of recession. He posited that in such an environment, flexible office spaces offer an effective means of navigating the turbulent global headwinds.
As many companies transition to a hybrid model, encouraging employees to return to office spaces, the demand for flexible office solutions is expected to surge. Vestian has further forecasted that, by 2025, the flexible office sector will comprise approximately 25 percent of the total office space absorption. The term "flexible office spaces" encompasses a wide spectrum of offerings, ranging from dedicated desks and hotdesking to coworking spaces, serviced offices, and managed office spaces. While coworking centres epitomize the highest degree of flexibility, managed offices are positioned at the other end of the spectrum, offering less flexibility.
The report delineated the existence of 50 major flexible space operators, with the top 10 players collectively holding a substantial 84 percent of the entire flexible office space portfolio. Noteworthy office areas such as Whitefield in Bengaluru, Hitech City in Hyderabad, Baner in Pune, Andheri (East) in Mumbai, and DLF Cybercity in Gurugram have emerged as preferred locations for both flexible space operators and their occupiers and tenants.
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