India’s flexible workspace sector is on track for rapid expansion, with predictions that it will outpace the traditional commercial office market. According to a recent report by Avendus Capital, the flex workspace market is projected to reach 126 million square feet by 2028, up from 61 million square feet in 2023. The growing adoption of work-from-anywhere policies and asset-light office expansion strategies drives this surge.

Around 250 flex workspace operators generate an annual revenue of $3.5 billion. Avendus forecasts this revenue will soar to $9 billion in the next five years. This growth will see the market share of flexible workspaces rise from 7% in 2023 to 12% by 2028. The sector is also expected to attract various investors, including growth capital, private equity, real estate, high-net-worth individuals, family offices, venture debt, and structured credit.

“As more enterprises explore remote workplace policies, we are seeing a broad shift towards flexible and modern office solutions,” said Prateek Jhawar, managing director and head of infrastructure and tangible assets at Avendus Capital. “The share of flex workspaces in the commercial office market is only growing. We expect at least four mature operators to go for a public listing within 2-3 years.”

Major operators such as WeWork India, IndiQube, Smartworks, Table Space, and Awfis are leading the transformation in the flex workspace market. These companies, offering a mix of coworking spaces and managed offices, are instrumental in shaping the market to meet clients’ diverse needs.

Jhawar noted that 80-90% of the demand for flexible workspaces will come from top-tier cities, with operators being selective about expanding into smaller markets. The sector experienced a slowdown during the 2020 pandemic as employees moved to their hometowns and embraced remote work.

However, demand has rebounded as more companies adopt flexible workspace solutions.

Demand for flexible workspaces is increasing across significant office markets, catering to various price points. Large enterprises seek satellite offices, while small and medium-sized businesses and startups opt for cost-effective office solutions. These companies are gravitating towards flexible workspaces in peripheral business districts of Tier I and some Tier II cities.

“We have already seen private equity investors warming up to this sector. Going forward, we will see more operators raising capital and gaining support from investors,” Jhawar added.

While the demand for flex workspaces is robust, operators are grappling with the challenge of securing high-quality real estate in the central business districts of the top seven cities at favourable rentals. However, the sector’s rapid growth and the increasing shift towards flexible office solutions indicate a promising future for India’s flex workspace market.