New Delhi, 31st July 2023: Pune’s flex space market is experiencing rapid growth, and it is expected to surpass 8 million square feet by 2025, making up 10% of the city’s total office stock. This growth is driven by significant investments and robust demand from various sectors, particularly the technology industry. According to Colliers’ latest report titled ‘Pune – Tech-tonic shift to flex,’ the city’s flex space market has seen substantial expansion in recent years, fueled by a young and dynamic population, the presence of major tech corporations, and the proliferation of numerous startups. The demand for flex spaces has further accelerated post-pandemic, driven by hybrid workstyles adopted by various occupiers.
As of June 2023, Pune’s flex stock currently stands at 5.4 million square feet, representing 8.3% of the total Grade A office space in the city. In comparison, Bengaluru, which has the largest flex space market in terms of size, has a flex space penetration of 7.3%. Pune has now surpassed Bengaluru in terms of flex space penetration, with its penetration rate standing at 8.3%.
Flex spaces have played a crucial role in introducing new workspace models such as Flex + Core, distributed workplace strategies, and hybrid working for occupiers. As a result, the share of flex space in occupiers’ portfolios at the national level has risen from 5-8% in 2019 to 10-12% in 2023.
To cater to the growing demand from occupiers, leading operators in Pune have rapidly expanded their operations in the last five years. During 2022, flex space operators leased 1.77 million square feet of office space, accounting for 35% of the total leasing in the city. In the first half of 2023, flex space operators leased an additional 0.57 million square feet, accounting for about 22% of the total leasing. Consequently, the flex space stock has witnessed a significant four-fold rise since 2018, growing from 1.3 million square feet to 5.4 million square feet as of June 2023.
Animesh Tripathi, Managing Director, Pune, Colliers India, stated, “Pune has emerged as one of the most popular flex space destinations in India, registering significant growth in the last 5 years. Flex spaces in the city are witnessing increased occupancy levels, and as flexibility, scalability, and cost optimization remain key factors for occupiers’ office expansion strategies, flex spaces will continue to gain prominence in Pune.”
The technology sector remains the leading occupier of flex space in Pune, contributing to 43% of the total seat uptake during 2020-H1 2023, followed by the Engineering & Manufacturing sector at 27%. As hybrid working is expected to become a long-term strategy for technology occupiers, they are expected to continue driving the demand for flex spaces in the city.
Vimal Nadar, Senior Director and Head of Research, Colliers India, mentioned, “Flex spaces have seen remarkable growth in Pune in the last 5 years, with its share in the city’s office stock growing from 2.8% in 2018 to 8.3% as of June 2023. The market continues to remain consolidated, with the top 5 operators holding a little more than three-fourth share. As occupiers seek more scalability options and increased customization, they will continue to commit towards Grade A operators.”
Baner-Balewadi and CBD are the top two flex micro-markets in Pune, accounting for 44% and 31% of Pune’s total flex stock, respectively. Popular flex locations within CBD include Kalyani Nagar, Mundhwa, and Yerwada. Furthermore, Viman Nagar and Kharadi are also expected to witness significant flex space expansion in the next 2-3 years due to robust supply pipelines, well-established infrastructure, and upcoming metro connectivity in these regions.
The report by Colliers indicates a promising future for Pune’s flex space market as the city continues to attract investments and demand from various sectors, making it a thriving hub for flexible workspace solutions.
