Real-estate management firm Colliers India and CRE Matrix, India’s rapidly growing start-up industry will be one of the top office space occupiers in the coming years, leasing 29 million square feet of office space between 2022 and 2024. According to the report titled ‘Start-ups Scaleup,’ despite the COVID onslaught, office leasing activity by startups gets expected to increase by 1.3 times from 2019-2021 to 2022-2024. According to the report, Indian startups leased 22.4 million square feet of office space in 2019-2020.
The total Indian office space inhabited by startups by 2024 gets expected to be around 78 square million feet, accounting for a 13% share compared to a mere 2% share in 2010. According to the report, while global companies dominate Indian office space, occupying more than 60%, startups have grown the most, currently occupying a sizable 10% share.
Demand will get led by fintech and logistics startups, which gained traction post-pandemic due to increased digital adoption and the e-commerce boom. As a result, it has a healthy pipeline on the list of potential unicorns. According to the report, increased digital adoption, the availability of a large talent pool, favorable government policies, and funding options from venture capitalists are also driving startup growth.
One of the most notable trends in the Indian office space has been increased entrepreneurship and the rapid growth of startups. Startups are the fastest growing occupier group among all occupier groups, accounting for 10% of office space. It has created various opportunities for office space providers to rethink and reposition their workplace offerings to attract a diverse set of occupiers. As the pace of startups accelerates, landlords must consider the business life cycle and work preferences of startups to capture real estate demand and drive more value.
Co-working or flex players occupy approximately 30 million square feet of office real estate in India. We believe that startups will take up a sizable portion of this. As a result, startups currently occupy more than 49.7 million square feet, according to anecdotal evidence. According to our internal projections, startups will occupy approximately 78 million square feet of office space plus 20-22 million square feet of flex space by 2024 for 100 million square feet. Within this startups segment, the fintech niche dominates all others in terms of startups, occupied office space, and growth. Other sectors, such as ed-tech, logistics, health tech, and proptech, are expected to catch up soon.
Which city has the most office lease share?
Bengaluru continues to be the top startup hub, with a 34% leasing share in 2019-21, with Koramangala, HSR, and Indiranagar being the favored locations for startups. A well-developed ecosystem, deep technology talent, and an entrepreneurial culture are said to be important factors attracting startups here.
In terms of leasing by startups, Delhi-NCR is among the fastest-growing markets, with a three-fold increase in leasing by startups during 2021 on a year-over-year basis. Over the years, Mumbai has seen pockets of startup activity as well. However, relatively higher rents and a high cost of living are frequently cited as deterrents by early-stage businesses. Emerging hubs such as Jaipur, Ahmedabad, Indore, and Coimbatore are also expected to see an increase in flex space and startup occupancy as entrepreneurs increasingly use these locations to launch operations.
As businesses look to cut costs on office space, the concept of shared workspace is gaining traction. As employees work from home and a hybrid model of work gains traction, the coronavirus outbreak has forced many companies to reconsider this model.
Startups have been active in leasing over the last three years. Continuing on this trend, startups are expected to occupy 78 million square feet of office space by 2024, accounting for 13% of the market, up from 2% in 2010. As of 2021, while multinational corporations continue to dominate Indian office space, accounting for more than 60% of the total, startup growth has been the most rapid, accounting for a sizable 10% share.
