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Mapping India’s Flexible Workspace Rental Trends: 2023 vs 2025

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The way India works is changing—fast. As hybrid models became mainstream post-pandemic, businesses and individuals started favouring flexibility over long-term commitments. This shift has propelled demand for flexible (‘flex’) office spaces, also known as co-working or managed office solutions. Let’s unpack the rental trends in this sector between 2023 and 2025—and what that means for tenants, landlords, and investors.

1. Flex Space Growth: The Big Picture

2023: Riding the Recovery Wave

By the end of 2023, flexible workspace had firmly cemented itself in India’s office market. In H1 2023 and the calendar year, absorption hit about 60.6 million sq ft, making 2023 the second-highest gross absorption year ever in office leasing

Grade-A flex spaces—in the top 8 cities at 58 million sq ft by mid-2024. That was 7–8% of all Grade-A office stock 

2025: Scaling Up, Cementing Position

Looking ahead, flex spaces are expected to capture 20–21% of India’s total office stock by 2025, growing at around a 15–20% CAGR 

ICRA projects the supply in the top six cities (Bengaluru, Chennai, Delhi-NCR, Hyderabad, MMR, Pune) to grow from ~80 msf (Dec 2024) to 125 msf by March 2027 

2. Leasing & Absorption Trends

Q1 2025: Flex Leading the Leasing Charge

Report that flex operators accounted for ~20.4% of Q1 2025 leasing—leasing well over 4 msf in successive quarters.

Leasing by flex operators was up 22% YoY in Q1 2025, with strong activity in Bengaluru, Delhi-NCR, and Pune.

YoY Demand Surge

Co-working and flexible office solutions saw 12.4 msf leased in 2024, equivalent to a 57.5% YoY jump.

Tech companies (IT/telecom) dominated with about 29–30% share of leasing volumes .

3. Rental Rates & Vacancy

Vacancy Cooling Down

Vacancy across the top seven cities fell to 15.7% in Q1 2025—the lowest in four years—helped by steady net absorption.

In March 2024, flex vacancy went from 20% to 17%, and despite new supply, was expected to hover at 16.5–17% by March 2025

Rent Growth: Steady and Modest

Q1 2025 saw a 0.1–6.5% QoQ increase in average rents across major cities. On a YoY basis, Hyderabad grew 14.5%, Kolkata 13.2%, Bengaluru 6.3%, while others saw 3–6% growth 

4. Regional Hotspots: Who’s Leading?

Bengaluru

  • 2024 absorption hit ~16 msf, confidence growing for 2025
  • Flex accounted for ~20% of city leasing in 2024

Delhi‑NCR, Mumbai, Pune, Hyderabad

  • Delhi‑NCR: ~14% of leasing share in Q1 2025; Pune and Hyderabad each ~17%, 13%
  • Hyderabad saw strong rent growth and leasing momentum .

Tier‑2 and Tier‑3 Cities

Startups and smaller companies are expanding into secondary cities. ICRA notes that flex spaces are rising even beyond metro areas 

5. Key Drivers Behind the Trends

Hybrid Work = Flex Must-Have

In India, 97% of employees and 98% of employers are happy with hybrid models—well above global averages. This shift means companies want adaptable spaces they can upsize or downsize in a flash.

GCCs & Tech Giants Prefer Agile Setups

Global Capability Centres in India increasingly favour flexible office operators for their short-term leases and scalability.

Tech giants, like Walmart, are raising footprints in cities like Chennai, with big deals scheduled from late 2025 

Startups & SMEs Driving Growth

Startups fuel demand—Cushman notes 450k flex seats leased between 2021 and H1 2024, at a 35–37% annual growth.

Flex spaces help small businesses cut capex, access shared amenities, and plug into communities

6. Market Size & Financial Growth

  • 2024 market size: ~$2.14 billion (Mordor) or ₹2.30 billion (USD) in 2025
  • 2025 value: Estimated $2.15–2.40 billion .
  • CAGR from 2019 to 2030: ~7% annually 

7. Supply Forecast & Institutional Moves

Supply Growth by Square Feet

ICRA projects supply to reach 125 msf by March 2027 from 80 msf in Dec 2024—a 21–22% CAGR

Rate of new flex supply in top 8 cities: ~5–9 msf annually between 2022–2023 

IPO Momentum

The segment became more institutional: one IPO in 2024, five more expected in 12–18 months, raising over ₹7,000 crore.

8. What Renters & Operators Should Know

For Renters (Startups, SMEs, GCCs)

  • Flexibility is key: short leases, scalable space.
  • Value-added amenities (like high‑speed internet, meeting rooms, wellness zones) are standard.
  • Locations matter: hubs like Bengaluru cater to tech and finance, while Hyderabad and Pune offer cost-effective alternatives.

For Operators & Investors

  • Focus on Tier‑2 expansion—new opportunities outside metros.
  • Invest in sustainability & tech—IoT sensors and smart-office tech are differentiators
  • Pricing strategy matters—balanced growth, lease flexibility, and community-driven offerings could set leaders apart.

9. Looking Ahead: 2025 and Beyond

  • 2025 milestones: Flex to hit ~20% of office stock; urban giants remain but Tier‑2 steadily rising.
  • Market size: Expected to hover between $2.3–2.4 billion, growing toward $3+ billion by 2030.
  • Tech & Hybrid Culture will continue fuelling demand.
  • New IPOs and deeper corporate adoption will bring scale, standardization, and operational efficiency.

Conclusion

From 2023 to 2025, India’s flex workspace industry has evolved from a niche segment to a crucial pillar of the office market. Growth in supply, absorption, and leasing share shows strong momentum. For tenants, flex spaces mean agility and convenience. For operators, it’s an expanding field with huge growth potential.

As workplaces adapt to hybrid cultures, flex spaces seem not just relevant—but essential. If you're weighing your workspace strategy, this dynamic market offers flexibility, scalability, and community—all in one package.


FAQs

1. What exactly is the term "flex office space"?

'Office space' is a term used to describe coworking offices or managed offices that allow companies to lease office space at flexible terms, along with shared facilities and the possibility to expand or reduce without difficulty.

2. What is the size of the market for flexible office spaces in India by 2025?

In the year 2025, flex offices are expected to comprise 20% to 21% of India's office space and have an estimated market value of $2.3-2.4 billion.

3. Which cities have the highest absorption of flexible office space?

Bengaluru, Delhi-NCR, Hyderabad, Pune, and Mumbai are the top flex space leasing cities in the country, with Bengaluru alone contributing around 16 million sq ft in 2024.

4. What are the reasons why startups and small businesses are using flex workspaces?

Startups choose flexible workspaces for less capital expense and plug-and-play spaces as well as short leases and access to community-based workspaces.

5. How will rental prices change in 2025?

Office rents increased only modestly (0.1-6.5 percent QoQ in the first quarter of 2025). Hyderabad and Kolkata were the main drivers of YoY growth in rent as vacancy declined to a four-year low of 15.7 percent.

6. Do Tier-2 cities and the Tier-3 ones a part of the growing trend for flexible workspaces Are they part of the flex workspace boom? 

Smaller and emerging companies are increasingly embracing flex offices within Tier-2 towns, presenting new possibilities for operators and investors.