Work-from-office mandates see flexi space providers catching up with tech firms in leasing offices

The technology sector remains the largest in terms of total space leased, accounting for a 26% share during the January-March quarter

Mayur Bhalerao
First Published4 Apr 2024
India's office space sector witnessed a gross absorption of 14.4 million sq.ft. between January and March. (Mint)
India’s office space sector witnessed a gross absorption of 14.4 million sq.ft. between January and March. (Mint)

Flexible office space providers have emerged as a significant challenger to technology firms in leasing offices, as companies across sectors gradually enforce return-to-office mandates for their employees.

Between January and March, flexible office space providers have already captured a significant 22% share of leasing activity, as per a report by real estate consultancy CBRE. 

This translates to a leased area of about 3 million sq.ft., marking a significant rise in the sector's influence. Flexible space operators consistently exceeding a 15% share in leasing activity over the past five years, a trend  CBRE anticipates will continue.

The technology sector remains the largest in terms of total space leased, accounting for a 26% share during the January-March quarter. The tech and flexible spaces sector together account for nearly half of all the office space leased in the March quarter, compared with 32% in the preceding three months.

This growth is attributed to a surge in demand from domestic firms, particularly those in the technology and financial services sectors. Notably, software and services companies within the technology sector took up 95% of the space leased by tech firms in the January-March period.

“The office sector continued witnessing meaningful gains in 2023, enhanced by a resurgence in occupiers’ sentiments and pent-up demand post a rise in return-to-offices,” said Anshuman Magazine, chairman and CEO-India, South-East Asia, Middle East & Africa, CBRE. “During 2024, occupiers would prioritise high-quality office space as they continue to facilitate portfolio expansion and consolidation.”

According to CBRE data, the office sector in India witnessed a gross absorption of 14.4 million sq.ft. between January and March. 

Bengaluru emerged as the leader in office leasing activity, followed by Delhi-NCR and Hyderabad. These three cities together accounted for 65% of all leasing activity in the first calendar quarter of 2024. Bengaluru also dominated the flexible space absorption market, followed by Delhi-NCR and Chennai.

Global capability centers, or the technology centres of companies across sectors, contributing to one-third of the overall leasing activity in the April-June quarter. Engineering and manufacturing companies were the major players within the GCC space, followed by automobile firms. 

“Office space take-up was dominated by small- (less than 10,000 sq.ft.) to medium-sized (10,000-50,000 sq.ft.) transactions in Q1 2024, with a share of 81%. The share of large-sized deals (greater than 100,000 sq.ft.) in Q1 2024 increased to 8% from 5% during the same period in the previous year,” CBRE said in a statement.

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