Flex Spaces: Transforming India’s Corporate Real Estate Landscape
The reimagination of workspaces is redefining India’s corporate real estate landscape, with flex spaces emerging as a key component in business strategies. As companies prioritize flexibility, scalability, and cost-efficiency, flex spaces are no longer niche but integral to how businesses operate. Colliers India’s recent survey, Flex Spaces: Reshaping the New-Age India Office Market, highlights the extent of this shift, projecting that over 80% of occupiers plan to expand their office portfolios through flex spaces in the next 3-5 years. This trend is poised to reshape the office market in India, with both multinational corporations (MNCs) and large domestic companies leading the charge.
Flexibility Driving Corporate Expansion
The primary appeal of flex spaces lies in the flexibility they offer occupiers, allowing companies to scale operations without the long-term commitment of traditional office leases. Approximately 60% of occupiers surveyed expect more than 20% of their office portfolios to consist of flex spaces within the next few years, while about 30% expect that figure to exceed 40%. The cost benefits, combined with the ability to quickly adapt to changing business needs, are compelling reasons for this growing preference.
Arpit Mehrotra, Managing Director of Office Services at Colliers India, notes, “With flex space offerings transforming from niche to mainstream, they are expected to increasingly define the contours of Grade A office space demand in India.” This transition is not limited to start-ups anymore. Large corporations and MNCs, previously more traditional in their real estate approaches, are embracing the flexibility offered by these spaces as they seek to manage costs and optimize their real estate portfolios.
Flex Spaces as Core Business Hubs
Interestingly, flex spaces are not merely a fallback for companies in need of temporary or overflow office space. Increasingly, they are being repurposed as central hubs for core business operations. According to the survey, around 40% of occupiers now see flex spaces as centers for core operations. This is particularly true for technology-driven sectors, where the adaptability and advanced infrastructure of flex spaces provide the perfect environment for innovation and collaboration. Nearly 45% of mid-sized companies and 35% of large corporates are now carrying out their primary business functions within these spaces, marking a significant departure from the past.
Vimal Nadar, Senior Director & Head of Research at Colliers India, explains: “Workspaces have steadily evolved to become centers for collaboration, innovation, and well-being, and flex spaces provide holistic solutions for the new-age workspace.” This shift towards core business operations in flex spaces also signals a deeper acceptance of longer lease commitments, with about 77% of occupiers preferring agreements of more than a year. It’s a stark contrast from the pre-pandemic norm, where shorter leases were typical for flex spaces.
Grade A Office Demand and the Growth Trajectory of Flex Spaces
As more companies recognize the benefits of flex spaces, demand for Grade A office space is increasingly driven by this segment. The Colliers report forecasts a 3-4X rise in the share of flex spaces in total office demand by 2030, with multinational corporations leading the charge. This is expected to be particularly pronounced in sectors such as technology, manufacturing, engineering, and healthcare, where over 80% of future expansion is predicted to be through flex spaces.
Flex spaces are becoming a strategic component in portfolio expansion plans. “Over 80% of the expansion in technology, engineering, manufacturing, and healthcare sectors would be through flex spaces,” says Mehrotra, highlighting the long-term growth trajectory. This shift underscores the broader transformation in how companies approach office space, with flex spaces offering the perfect balance of flexibility and stability for business operations.
Location Matters: The Preference for Core Areas
While flexibility is a key driver, location remains critical for many occupiers. The survey found that 45% of respondents favor expanding their portfolios in core areas of major cities, such as central business districts (CBD) and secondary business districts (SBD) in both Tier I and Tier II cities. These prime locations offer connectivity, prestige, and amenities, making them ideal for companies looking to enhance their brand and attract top talent.
With flex spaces expanding in these areas, companies are not just looking at peripheral zones for cost savings but are also investing in central locations to maintain business continuity and support growth. This location-driven strategy further solidifies flex spaces as a critical component in long-term real estate planning.
The Flex Space Market Maturity
One of the most notable trends identified in the report is the increasing willingness of occupiers to commit to longer lease terms for flex spaces, signaling the maturity of this market. Around three-fourths of surveyed occupiers, including MNCs and large domestic firms, are inclined towards longer lease periods. The average commitment period is expected to reach nearly three years in the next few years, a significant increase from the pre-pandemic average of less than a year.
This development indicates that occupiers now view flex spaces as a stable and reliable part of their real estate portfolios, not just a temporary or stop-gap solution. The maturity of flex space offerings, combined with enterprise-level services and enhanced technology infrastructure, has contributed to this growing confidence.
As flex spaces transition from niche offerings to mainstream solutions, they are set to redefine the future of India’s office market. Occupiers across industries are adopting flex spaces for their flexibility, cost-efficiency, and ability to serve as core business hubs. With more companies committing to longer leases and expanding in central business areas, the future of flex spaces in India looks promising, with a steep upward trajectory expected in the coming years. Flex spaces are not only reshaping the real estate landscape but also influencing how companies think about workspaces and operations, marking a new era for the Indian office market.
