Hyderabad: Hyderabad has seen a healthy growth in office space in the last few years, which has triggered growth prospects in the flexible work space. The city today has 4.5 million sq ft of flexible space stock, ahead of larger metro such as Mumbai which has just 4.3 million sq ft.
According to JLL, Hyderabad is currently among the fastest-growing markets in the country. While the national average of market penetration of flex spaces into total office stock stands at 3 per cent, the city saw 4 per cent penetration, second highest in the country after Bengaluru at 4.8 per cent.
Hyderabad’s spatial distribution is much higher than that of Mumbai, Delhi NCR, Pune, Chennai and Kolkata. The city has attracted all the top flex space operators that include WeWork India, SmartWorks, Awfis, CoWrks and 91springboard.
WeWork, which is one of the leaders in the flex space segment, has seen the flex space pricing in Hyderabad in the range of Rs 4,000-25,000 per desk per month in central and secondary business districts and Rs 4,000-20,000 per desk per month in the sub-urban and peripheral business districts of the city.
As companies return to the workplace, JLL research shows, they are likely to further leverage flexible space to reduce capital expenditure and create cost savings, while allowing for split teams and de-densification requirements.
Developments that initially drove the growth of the flex market, like the focus on utilising workplaces to boost productivity and drive dynamic work cultures, enhance emphasis on employee health etc., will continue to influence the next phase in India.
Pan-India market
The country is expected to witness deeper flex space penetration, throughout 2021 and beyond. Irrespective of several short-term disruptions and challenges, increased demand from large enterprises, will support the growth of the flex space market to more than 50 million sq ft by 2023.
It is anticipated that flexible space will grow by an average of around 15-20 per cent per annum over the next three-to-four years, although this trajectory will not be linear. The market penetration of flex spaces into total office space is likely to see a gradual increase from the current 3 per cent to 4.2 per cent by 2023.
We expect this growth to continue, driven by demand, profitability and return-profile for investors, albeit at a slower pace resulting from the impact of COVID-19,” said Ramesh Nair, CEO & Country Head (India), JLL.
At present, Bengaluru and Delhi NCR together account for more than 50 per cent of the flex space stock in India, with Bengaluru housing around 10.6 million sq ft of such spaces.
The flex space operators are now laying a greater emphasis on profitability and evolving strategies to ensure stable occupancy levels in their flex space centres. The entry of over 300 flex space operators into the country helped commoditise the market.
Prior to the pandemic, most of these operators were focused on attaining scale and capturing market share. However, the availability of capital, in the current scenario, will be a challenge. In such a scenario, the market is likely to witness consolidation.
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