Pune’s flex space market has seen significant growth during the last five years, led by a burgeoning young population, the presence of large tech corporates, and the proliferation of numerous startups. Occupiers’ hybrid workstyles have further accelerated the demand for flex spaces in the city, especially post-pandemic.
According to the report, since 2018, Pune’s flex stock has witnessed a four-fold rise and currently stands at 5.4 million sq feet as of June 2023. This translates to 8.3% of the total Grade A office space of the city, the highest across the top 6 cities. While Bengaluru remains the largest flex space market in India in terms of the size of flex stock, Pune has surpassed Bengaluru in flex space penetration at 8.3%.
“Pune has emerged as one of the popular top flex space destinations in India, registering a significant growth in the last five years. Share of Pune in Pan India flex leasing increased from 5% in 2018 to 25% in 2022. Flex spaces in the city are also seeing increased occupancy levels as enterprise outsourcing has become mainstream. As flexibility, scalability, and cost optimisation remain ‘table stakes’ for occupiers’ office expansion strategies, flex spaces will continue to gain prominence in the city. A greater focus on the flight to quality, increased customisation and amenitization would further provide a business case for a rental upside.” says Animesh Tripathi, Managing Director, Pune, Colliers India
To meet the burgeoning demand from occupiers, top operators in the city have expanded rapidly over the last five years, with annual space uptake rising multi-fold each year. During 2022, flex space operators leased 1.77 million sq feet of office space, accounting for 35% of the total leasing of the city. The first half of 2023 also witnessed robust leasing by the flex space operators at 0.57 million sq feet, about 22% of the total leasing. As a result, flex space stock also witnessed a significant 4X rise, from 1.3 million sq feet in 2018 to 5.4 million sq feet as of June 2023, mentioned Colliers.“Flex spaces have seen remarkable growth in Pune in the last five years, with its share in the city’s office stock growing from 2.8% in 2018 to 8.3% as of June 2023. Led by rising demand from Technology, Engineering & Manufacturing sectors, flex space operators are rapidly expanding their footprints in the city. While smaller operators continue to foray into the space, the market remains consolidated, with the top 5 operators holding a little more than three-fourths share. Amidst an evolving business environment, occupiers will continue to commit towards Grade A operators seeking more scalability options across locations with increased customisation.“ said Vimal Nadar, Senior Director and Head of Research, Colliers IndiaTechnology sector remained the top occupier of flex space and contributed to 43% of the total seat uptake during 2020-H1 2023, followed by Engineering & Manufacturing at 27% share. As hybrid working is expected to remain a mainstay for Technology occupiers, they will continue to lead flex space demand in the city, the report mentioned.Flex spaces have been at the forefront in enabling new workspace models such as flex plus core, distributed workplace strategy and hybrid working for occupiers and have become an integral part of occupiers’ portfolios. At an all-India level, the share of flex space in the occupiers’ portfolios has risen, from 5-8% in 2019 to 10-12% in 2023, Colliers said.