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The demand for flex spaces saw unprecedented growth in 2024 in India’s top six cities with leasing of flex spaces recording a growth of 44 per cent at 12.5 million sqft.
The co-working and managed workspaces industry is likely to continue its growth path in 2025 amid growing adoption of flexible workspaces for accelerating business growth.
The flex space segment is likely to continue its upwards trajectory in the coming years as more companies look to optimise cost and prioritise employee well-being, according to flex space operators and industry experts. The segment recorded a strong growth momentum in 2024.
The uptick in absorption of flex spaces in tier-2 and 3 cities, along with creation of quality supply, will be significant in these cities in the year ahead.
According to Colliers, the demand for flex spaces saw unprecedented growth in 2024 in India’s top six cities with leasing of flex spaces recording a growth of 44 per cent at 12.5 million sqft.
With this, flex spaces have now overtaken BFSI to become the second biggest occupier in 2024. The technology sector leads with leasing of 16.3 million sqft, a growth of 14 per cent, while BFSI (banking, financial services, and insurance) leased 11 million sqft, a decline of 3 per cent.
The pan-India leasing stood at 66.4 million sqft in 2024, up 14 per cent.
The technology sector accounted for 25 per cent, flex spaces 19 per cent and BFSI 17 per cent of the total leasing in 2024.
Flex space operators are optimistic that this segment will continue its momentum in 2025 on the back of sustained influx of enquiries from enterprises and SMEs.
Nikhil Madan, co-founder of TOP (The Office Pass), said, “Building on the momentum of 2024, we anticipate another year of robust demand for flexible spaces in 2025. The shift towards hybrid work models, coupled with businesses’ desire for agility and cost efficiency, will continue to drive the need for adaptable, amenity-rich work environments.”
According to the report, flex spaces saw their highest ever quarterly leasing at 4.7 million sq. ft. in Q4 2024, accounting for 24% of the total area leased in the quarter.
Shesh Rao Paplikar, founder and CEO of BHIVE Workspaces, said, “The co-working and managed workspaces industry is likely to continue its growth path in 2025 led by the sustained rise of the startup ecosystem, growing adoption of flexible workspaces for accelerating business growth and greater exposure by multinational corporations. The abolition of angel tax in the last union budget and policy incentives for the startup industry has played a pivotal role in making the co-working industry even more attractive, thereby fueling its expansion across the country.”
Even as Delhi-NCR and Bengaluru together accounted for over half of the total flex space leasing during the year, the foray into tier 2 and 3 cities in a big way looks imminent as demand in these cities swell up.
Vimal Nadar, senior director and head of research, Colliers India, said the occupier preference for managed office spaces augurs well for leading operators, who are likely to increasingly foray into Tier-II/III cities throughout 2025 and expedite their fund-raising plans through primary markets as well.
Peush Jain, MD-Commercial Leasing and Advisory, Anarock Group, said the rise of suburban and Tier-II city, flex hubs have allowed businesses to offer decentralised workspace options to their employees, reducing travel times and increasing productivity levels.
“Occupiers are no longer viewing flex spaces as temporary solutions but as strategic assets that align with hybrid work models. The integration of technology into flex spaces has further enhanced their favourability. Advanced booking systems, AI-driven space utilization analytics, and smart building solutions have made these spaces more efficient and feasible for users,” Jain added.
Flex operators accounted for almost 20 per cent of the India office space demand in 2024, up from 5-15 per cent share in each of the years starting 2020, the Colliers report reiterated.
“We are quite bullish on the prospects of the industry in 2025 where the co-working model is expected to mature further with sector specific workplaces set to rise this year while accelerating profitability through an array of value-added services. The industry will also corner a fifth of all office space absorption in the country this year while forging long-term relationships with occupiers,” Paplikar from BHIVE Workspaces added.
Flex space operators are also tapping the market to raise funds in order to finance their expansion across multiple Indian cities. “Our projections indicate that 2025 will see a sustained influx of inquiries from enterprises and SMEs alike, all seeking flexible solutions that support their evolving needs. As a flexible space provider, we’re well-positioned to meet this demand, offering a range of innovative, technology-enabled spaces that foster productivity, collaboration, and creativity,” Madan from TOP concluded.
