Demand for shared office spaces hits a new high in FY23; Tech cities top charts

Corporate demand for flexible space has driven enterprise leases of co-working facilities to 103,665 seats in FY23, a significant increase from the previous year’s 87,345 seats, largely due to softening economic conditions, as per an industry report. The leasing of flexible seats reached a record high in FY23, experiencing 20% year-on-year growth and doubling its growth compared to FY21, according to data from Cushman & Wakefield. The tech cities of Bengaluru, Hyderabad and Pune accounted for a significant 78% share of the ‘flex seat’ leases in FY23, said the study. To meet the increasing demand, companies including Smartworks, WeWork, Awfis, Skootr, UrbanVault, Vatika Business Centre and The Executive Centre are actively expanding their operations.

“The post pandemic transformation in occupier demand and changing workplace dynamics has paved the way for the growth of the flex space industry,” said Ramita Arora, managing director-Bengaluru and head-flex India at Cushman & Wakefield.

The share of space leased by flexible workspace providers witnessed a significant increase from 9% in FY20 to 14% in FY23. Moreover, in FY23, the uptake of operator space in the flex sector experienced a remarkable growth of 57% compared to FY20 and 76% compared to FY22.

Over the past five years, the flexible workspace industry has grown five-fold, demonstrating an impressive compound annual growth rate (CAGR) of 41%.

“The numbers strongly indicate the market’s direction, reflecting significant momentum and confidence in the flex spaces as they have become a way of life. The demand for flex is soaring given the shift in preference of both occupiers and employees,” said Harsh Binani, co-founder, Smartworks. In a recent development, Smartworks has expanded its operations by adding new centres and securing 530,000 sq ft of office space in Noida and Gurgaon. This expansion has propelled their regional portfolio to surpass 1 million sq ft.

“Flexible office spaces offer a more cost-effective alternative, as businesses can rent only the space they need for a specific period, avoiding hefty upfront costs and long-term commitments,” said Ankit Jain, co-founder of Skootr.

During Q3 2022, the trend of returning to the office gained momentum across various sectors.