India’s flexible workspace market is poised for a significant expansion and will outshine the traditional commercial office sector. Driven by the rise of work-from-anywhere policies and asset-light office strategies, the sector is expected to grow from 61 million square feet in 2023 to an impressive 126 million square feet by 2028, according to a recent report by Avendus Capital.

The report highlights a projected increase in market share for flexible workspaces, growing from 7% in 2023 to 12% by 2028. This rapid growth is underpinned by the sector’s robust revenue trajectory, with annual revenues predicted to soar from $3.5 billion in 2023 to $9 billion in five years. Prateek Jhawar, Managing Director and Head of Infrastructure and Real Assets at Avendus Capital emphasised, “As more enterprises explore remote workplace policies, we are seeing a broad shift towards flexible and modern office solutions.”

The diverse array of investors eyeing the sector, including growth capital, private equity, real estate investors, high-net-worth individuals, family offices, venture debt, and structured credit, underscores its lucrative potential. Significant players like WeWork India, IndiQube, Smartworks, Table Space, and Awfis are at the forefront of this boom, offering a blend of co-working spaces and managed offices tailored to modern business needs.

Awfis, supported by ChrysCapital and Peak XV Partners, recently launched a This is the successful IPO. It was the first IPO by a flex workspace operator in India. Jhawar noted, “We expect at least four mature operators to go for a public listing within 2-3 years.”

The sector’s growth has challenges. The pandemic initially slowed demand as employees relocated and embraced remote work. However, the subsequent surge in demand as companies adopted flexible workspace solutions has revitalised the market. Jhawar pointed out that 80-90% of this demand will come from top-tier cities, with operators being selective about expanding into smaller markets.

Demand is growing across significant office markets, accommodating diverse price points. Large enterprises seek satellite offices, while small and medium-sized businesses and startups opt for cost-effective solutions in peripheral business districts of Tier I and some Tier II cities. However, securing high-quality real estate at favourable rentals in the central business districts of the top seven cities remains a significant challenge for operators.

In summary, India’s flex workspace market is on an upward trajectory, driven by evolving workplace policies and significant investor interest. As the market matures, it presents a compelling opportunity for growth and innovation in the commercial real estate sector.