Pune's flex space stock expected to cross 8 msf by 2025, to account for 10% of the city's office stock

• Pune’s flex stock rose 4X since 2018 and currently stands at 5.4 mn sq ft as of June 2023
• Pune has the highest flex space penetration Pan India at 8.3%, followed by Bengaluru at 7.3%
• Technology sector remains the top occupier of Pune’s flex space, accounted 43% share in total seat uptake during 2020-H1 2023
• Baner-Balewadi and CBD hold 75% of the total flex stock in Pune; Viman Nagar and Kharadi to see increased traction

PUNE, India, July 31, 2023 /PRNewswire/ — Driven by healthy investment and robust demand from Technology & other mainstream sectors, Pune’s flex space stock is expected to cross 8 million sq feet by 2025, accounting for 10% of the total office stock of the city, according to Colliers’ latest report ‘Pune – Tech-tonic shift to flex’. Pune’s flex space market has seen significant growth during the last five years, led by a burgeoning young population, presence of large tech corporates, and proliferation of numerous startups. Occupiers’ hybrid workstyles have further accelerated the demand for flex spaces in the city, especially post pandemic. Since 2018, Pune’s flex stock has witnessed a four-fold rise and currently stands at 5.4 million sq feet as of June 2023. This translates to 8.3% of the total Grade A office space of the city, the highest across the top 6 cities. While Bengaluru remains the largest flex space market Pan India in terms of size of flex stock, Pune has surpassed Bengaluru in flex space penetration, at 8.3%.

City wise flex space penetration as of Q2 2023 (%)

Flex spaces have been at the forefront in enabling new workspace models such as Flex + Core, distributed workplace strategy and Hybrid working for occupiers, and have become an integral part of occupiers’ portfolio. At an all-India level, share of flex space in occupiers’ portfolio has risen, from 5-8% in 2019, to 10-12% in 2023.

To meet the burgeoning demand from occupiers, top operators in the city have expanded rapidly over the last five years, with annual space uptake rising multi-fold each year. During 2022, flex space operators leased 1.77 million sq feet of office space, accounting for 35% of the total leasing of the city. The first half of 2023 also witnessed robust leasing by the flex space operators at 0.57 million sq feet, about 22% of the total leasing. As a result, flex space stock also witnessed a significant 4X rise, from 1.3 million sq feet in 2018, to 5.4 million sq feet as of June 2023.

Leasing by flex space operators in Pune (mn sq ft)

 

“Pune has emerged as one of the popular top flex space destinations Pan India, registering a significant growth in the last 5 years. Share of Pune in Pan India flex leasing has increased manifold from 5% in 2018 to 25% in 2022. Flex spaces in the city are also seeing increased occupancy levels, as enterprise outsourcing has become mainstream. As flexibility, scalability, and cost optimization remain ‘table stakes’ for occupiers’ office expansion strategies, flex spaces will continue to gain prominence in the city. A greater focus on flight to quality, increased customization and amenitization would further provide a business case for a rental upside,”  says Animesh Tripathi, Managing Director, Pune, Colliers India

Technology – the largest occupier of flex space

As majority of Technology occupiers have adopted ‘Hybrid work model’ as a long term strategy, flex spaces have become an integral part of Tech occupiers’ real estate portfolio. Technology sector remained the top occupier of flex space, and contributed to 43% of the total seat uptake during 2020-H1 2023, followed by Engineering & Manufacturing at 27% share. As hybrid working is expected to remain a mainstay for Technology occupiers, they will continue to lead flex space demand in the city.

“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. Led by rising demand from Technology and Engineering & Manufacturing sectors, flex space operators are rapidly expanding their footprints in the city. While smaller operators continue to foray into the space, market continues to remain consolidated with the top 5 operators holding a little more than three-fourth share.. Amidst an evolving business environment, occupiers will continue to commit towards Grade A operators seeking more scalability options across locations with increased customization,” said Vimal Nadar, Senior Director and Head of Research, Colliers India

Baner-Balewadi and CBD house 75% of Pune’s flex stock

Pune’s Baner-Balewadi and CBD are amongst the top 10 flex micro-markets Pan India amongst ORR & SBD 1 (Koramangala, CV Raman Nagar, IRR, Indiranagar, and others) in Bengaluru and SBD (Madhapur, HITEC City, Kondapur and Rai Durg) in Hyderabad. As of Q2 2023, Baner-Balewadi accounted for 44% of Pune’s total flex stock followed by CBD at 31%. Kalyani Nagar, Mundhwa and Yerwada are some of the popular flex locations within CBD. Going forward, Viman Nagar and Kharadi also hold significant potential for flex space expansion in next the 2-3 years due to robust supply pipeline, well-established infrastructure, and the upcoming metro connectivity in the region.

About Colliers

Colliers (NASDAQ: CIGI) (TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 66 countries, our 18,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 28 years, our experienced leadership with significant inside ownership has delivered compound annual investment returns of approximately 20% for shareholders. With annual revenues of $4.5 billion and $98 billion of assets under management, Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our investors and our people.

Learn more at corporate.colliers.com, Twitter @Colliers or LinkedIn.

Media Contact:

Sukanya Dasgupta

Senior Director & Head, India Marketing & Communications

[email protected] 

+91 9811867682/ +91 8826377335

Logo: https://mma.prnewswire.com/media/2147073/4149184/Colliers_New_Logo.jpg

 

View original content:https://www.prnewswire.com/in/news-releases/punes-flex-space-stock-expected-to-cross-8-msf-by-2025-to-account-for-10-of-the-citys-office-stock-301889023.html

Source link