Startups to lease 29 million sq ft of office space during 2022-24

Startups to account for 13 per cent of overall occupied office space by 2024, from a mere two per cent in 2010. They will occupy 22 per cent of India’s office leasing in 2024. Their occupancy has consistently grown at a 38 per cent CAGR over last 12 years.

Hyderabad: Indian startups are expected to lease about 29 million sq feet between 2022 and 2024, an increase from 22.4 million sq ft leased during the 2019-2021 period. Their total occupancy which is currently at 49.7 million sq ft will cross 78.3 million sq ft by 2024.

Startups to account for 13 per cent of overall occupied office space by 2024, from a mere two per cent in 2010. They will occupy 22 per cent of India’s office leasing in 2024. Their occupancy has consistently grown at a 38 per cent CAGR over last 12 years.

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In 2019-21, Hyderabad accounted for 18 per cent of the 22.4 million sq ft office space leasing, driven by leasing done in HITEC City and Gachibowli, while Bengaluru accounted for 34 per cent of the leasing. Together these cities contributed to more than half of the leasing done by India’s top six cities (also comprising NCR, MMR, Pune and Chennai).

The office demand will be led by fintech and logistics startups as they have gained momentum post pandemic due to increased digital adoption and e-commerce boom and hold a healthy pipeline in potential unicorns list.

“Startups are the fastest growing occupier group among other occupier groups, and currently occupy 10 per cent of the office space. This has created numerous opportunities for office space providers to rethink and reposition their workplace offerings to attract diverse set of occupiers,” Ramesh Nair, CEO, India & MD, Market Development, Asia, Colliers said.

As startups pick up pace, landlords need to consider the business life cycle and work preferences of the startups to capture the real estate demand from startups to drive more value, Nair added.

“About 30 mn sq ft office space in India is occupied by co-working or flex players. We believe a large share of this is occupied by startups,” said Abhishek Kiran Gupta, CEO & co-founder, CRE Matrix.
While metro cities remain the core hubs for startups, non-metro cities are seeing growth in startup leasing as well as flex space take up due to low cost of living, reduced capex, and work from anywhere trend.

As startups focus on creating collaborative culture, demand for well designed, fully managed spaces will increase. Flexible lease terms, minimal lock-ins and security deposits will also be an important parameter for startups while leasing space. This will create ample opportunities for flex space providers.

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