In 2023, leasing demand in India from flex office space operators surged by around a quarter to 87 lakh square feet (lsf). Responding to this demand, the Hong Kong-based flexible workspace provider, The Executive Centre (TEC), plans to open 3 lakh square feet of office space in India in 2024.
“In response to the surging demand for flexible workspaces in India, we’re strategically expanding within existing cities in 2024,” NidhiMarwah, Group Managing Director, South Asia & Middle East, told businessline.
Asia’s third-largest serviced office provider has experienced rapid growth in India over the last five years, expanding across major cities such as Bangalore, Hyderabad, Chennai, Mumbai, Pune, Gurgaon, and New Delhi. During this period, TEC has added over 6.5 lsf to its portfolio, reaching a total area of over 11 lsf.
TEC operates offices in over 200 centres in 33 cities and 15 markets.
Flex stock space in India has doubled over the last 4-5 years and its penetration in the Indian office market is expected to rise further in 2024, with developers adopting core plus flex strategy for decision making.
Marwah spoke about TEC’s plans in India and how the flex space is evolving. Edited excerpts:
With demand for flex spaces increasing, what are your strategies for expansion?
In response to the surging demand for flexible workspaces in India, we’re strategically expanding within existing cities in 2024. With approximately 3 lakh square feet set to open this year across our markets in India, we continue to foster growth, innovation, and collaboration, ensuring that The Executive Centre remains at the forefront of providing tailored, world-class flexible workspace solutions.
Flex stock space in India has doubled over the last 4-5 years. What has been TEC’s growth in India and how does it compare with the growth overseas?
The adoption of flexible workspaces has accelerated over the last five years due to a domino effect of world events, from the pandemic to global financial uncertainties and unstable geopolitics. According to a recent industry report, the flexible office space market is likely to rise 60 per cent to over ₹14,000 crore this fiscal. Over the past five years, TEC has experienced remarkable growth in India, expanding across key cities such as Bangalore, Hyderabad, Chennai, Mumbai, Pune, Gurgaon, and New Delhi. In this period, TEC has added 6. 5 lakh square feet to its portfolio, reaching a total area of 1.1 lakh square feet. The flexible workspace industry in India has outpaced growth in other western markets, reflecting its robust and thriving nature.
Flex operators are increasingly opening centres in Tier 2 cities. How do you read this trend and is TEC also following it?
While TEC acknowledges the traction in these markets, our current strategy does not include immediate plans to expand into new tier 2 cities. Instead, we maintain a keen focus on strengthening our presence in the seven key cities where we are already established.
What are your capex requirements over the next two years?
Our minimum growth expectation is 4 centres (one in South, 2 in West and 1 in North) with a capex requirement of $1.8 million per centre which means a requirement of around Rs.60 to 70 crores depending on the floor plate availability.
What is TEC’s vacancy, occupancy stats across properties? How does it compare with the portfolio overseas?
TEC India consistently maintains robust occupancy levels… Currently, our spaces have average occupancy rate of 88 per cent. Comparatively, TEC’s global occupancy varies across regions, with the Asia-Pacific standing out as our strongest market, characterised by high occupancy and continual expansion. Our hold over the UAE market is robust, with 100 per cent occupancy in our centres in Dubai and Abu Dhabi. Similarly, we have 100 per cent occupancy rate in Sri Lanka as well.
How do you see the flex space evolving over the next five years?
Over the next five years, the flexible workspace industry will expand its market share significantly, with agility emerging as the new stability. A “flight to quality” will drive demand, reflecting the increasing need for premium and adaptable workspaces. In India, shared workspaces are on the rise, projected to reach 80 million square feet by 2026, constituting 9-10 per cent of the total Grade A office stock.