Between 2022 and 2024, Indian startups are predicted to lease around 29 million square feet, an increase from the 22.4 million square feet leased between 2019 and 2021. Their total occupancy, which is currently 49.7 million square feet, will exceed 78.3 million square feet by 2024.
Startups will account for 13% of total occupied office space by 2024, up from 2% in 2010. In 2024, they will account for 22% of India’s office leasing. Over the last 12 years, their occupancy has steadily increased at a CAGR of 38%.
In 2019-21, Hyderabad accounted for 18% of the 22.4 million sq ft office space leasing, driven by HITEC City and Gachibowli leasing, while Bengaluru accounted for 34% of the leasing. These cities collectively accounted for more than half of the leasing done by India’s top six cities (also comprising NCR, MMR, Pune and Chennai).
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Fintech and logistics firms will drive office demand, since they have gained traction since the pandemic due to increasing digital use and an e-commerce boom, and they have a robust pipeline in the possible unicorns list.
Startups are the fastest growing occupier group among other occupier groups, accounting for 10% of office space. This has generated several opportunities for office space providers to rethink and reposition their workplace offerings in order to attract a varied set of occupiers, said Ramesh Nair, CEO of Colliers India and MD of Market Development in Asia.
As the pace of startups accelerates, landlords must address the company life cycle and work preferences of startups in order to capture real estate demand from startups and produce greater value, according to Nair.
Approximately 30 million square feet of office space in India is occupied by co-working or flex players. We expect startups will take up a substantial portion of this, said Abhishek Kiran Gupta, CEO and co-founder of CRE Matrix.
While metro areas continue to be the primary startup hubs, non-metro cities are seeing an increase in startup leasing, as well as flex space, take up due to low cost of living, less CAPEX, and the work from anywhere trend.
As companies focus on cultivating a collaborative culture, there will be greater demand for well-designed, fully managed facilities. Flexible lease terms, low lock-in periods, and security deposits will also be essential considerations for businesses when leasing space. This will open up a plethora of prospects for flex space providers.
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