Flex space operators in Delhi-NCR leased the maximum area — around 2.9 mn sq ft — in 2022, accounting for 31.7 percent of the total space leased by such players across the top seven cities. This was also the maximum area leased in the country till date.
In the 15-month period from January 2022 to March 2023, more than 28,000 seats were leased by end-users in flex spaces, according to a report by JLL released on May 8.
The year started on a positive note for the Delhi NCR office market as more than 7,000 seats were leased by end-users of flex spaces in Q1 (January-March) 2023. Most of the demand for managed office spaces was from enterprises looking for a more customised flex space with a focus on end-to-end amenities and workplace management, it said. Education, consulting, and technology companies led the demand for flex seats, the report added.
The average space leased by operators has increased from around 29,000 sq ft in 2018 to 55,000 sq ft in Q1 2023.
The major flex operators that leased space between January 2022 to March 2023 include Tablespace, Smartworks, Simpliwork, Skootr, Wework, 91 Springboard, Awfis, Incuspaze, and Cowrks, among others. Operators such as DevX, Symbyont Smartspaces, VentureX, and EFC India also marked their entry into Delhi NCR by opening their flex centres in the region.
The growth in flex spaces is manifest in the phenomenal growth of flex stock as well. The flex space stock in Delhi NCR has grown about 1.5X, from 6.3 mn sq ft in 2019 to 9.4 mn sq ft in Q1 2023. This increase in the flex footprint is being led by co-working, as well as managed and enterprise bespoke, operators.
Of the 28,000-plus seats leased by flex operators between January 2022-March 2023, 67 percent (about 19,000 seats) were for enterprise solutions or managed office spaces. About 58 percent of the enterprise leases (around 11,000 seats) were for large spaces of 300 seats or more, the report said.
In the same period, the maximum demand (61 percent) for flex seats was driven by domestic firms. Start-ups accounted for 38 percent of this demand as flex operators are flexible about lease tenures, provide the ability to scale up or down quickly, and also the ability to deploy teams across multiple locations at minimal capex.
The top sub-markets where the bulk of end-user leasing took place in the last 15 months were Prime NH8, Cybercity, and Udyog Vihar in Gurgaon. Gurgaon has emerged as a major corridor for flex spaces, as around 52 percent of the flex stock is present in this submarket. NH8, Cyber City, Udyog Vihar, Golf Course Road, and Sohna Road in Gurgaon are home to many flex centres. These markets together accounted for around 28 percent of the flex seats leased in Delhi NCR from January 2022 to March 2023.
This is followed by Noida, which has 38 percent of the flex space stock in Delhi NCR. Many end-users / enterprises have leased space in flex centres along the Greater Noida Expressway. This sub-market had a 25 percent share in the total seats leased in Delhi NCR. Sectors 125 and 126 of this submarket were the hotspots for leasing activity. Noida city, which includes Sector 16 and 62, was not far behind with 15 percent of seats.
Delhi also saw some leasing action, with about 8 percent share in the total number of seats leased, the report said.
The flex space segment is expected to see steady growth in the future as well, driven by enterprise-led demand for managed offices as it provides multiple benefits to enterprises.
“The share of flex spaces in the total office space leased in Delhi NCR has increased significantly, from 10.9 percent in 2018 to around 24 percent in 2022. As work-from-office accelerates, the flex spaces segment will continue to see healthy demand in large markets like Delhi NCR,” said Samantak Das, Chief Economist and Head of Research, JLL India.
Managed office spaces are meant to meet the demands of big enterprises, which require their offices to be built according to their brand philosophy and design guidelines. Flex space operators in the managed office domain create a workplace unique to the requirements of a client, and offer hospitality industry-like value-added services.