Start-ups to lease 29 mn square feet office space by 2022-24: Report

India’s aggressively growing start-up industry will be one of the top office occupiers in next few years, likely to lease 29 million square feet office space during 2022-24, a report by real-estate management firm Colliers India and CRE Matrix points out. The report titled 'Start-ups Scaleup' states that despite the COVID onslaught, the office leasing activity by start-ups is set to see a  1.3 times jump from 2019-2021 to 2022-2024. Indian start-ups, as per the report, had leased 22.4 million square feet of office space in 2019-2020.

The total office space occupied by start-ups by 2024 is estimated to be about 78 sq million feet by 2024 accounting for a 13 per cent share from a mere 2 per cent share in 2010. As of 2021, while global companies continue to dominate Indian office space, occupying more than 60 per cent, growth of start-ups has been the highest, currently occupying a sizeable share of 10 per cent, as per the report.

The demand will be led by fintech and logistics start-ups as they have gained momentum post-pandemic due to increased digital adoption and e-commerce boom, and, as a result, hold a healthy pipeline in potential unicorns list. Additionally, increased digital adoption, availability of a deep talent pool, favourable government policies and funding options from venture capitalists are steering growth of start-ups as per the report.

Ramesh Nair, CEO, India, and managing director, market development, Asia, Colliers said that increased entrepreneurship and rapid growth of start-ups has been one of the most remarkable trends in Indian office space.

“Start-ups 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. As start-ups 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.

Bengaluru remains the start up hub

When it comes to office occupancy, Bengaluru remains the top start-up hub with a 34 per cent share in the office leasing during 2019-21, with Koramangala, HSR and Indiranagar being the preferred locations for start-ups. A well-developed ecosystem, deep technology talent, and a culture of entrepreneurship are major factors attracting start-ups in the tech capital, the report noted.

It added that Delhi-NCR is amongst the fastest-growing market in terms of leasing by start-ups. Delhi-NCR witnessed a three-fold increase in leasing by start-ups during 2021 on a year-on-year (YoY) basis. The region benefits from being a catchment for education institutions in the North and East India, along with the presence of strong infrastructure.

Mumbai has seen certain pockets of start-up activity over the years. However, relatively higher rentals, and high cost of living are often seen as deterrents by early-stage companies.

While metro cities remain the core hubs for start-ups, non-metro cities are also seeing growth in start-up leasing as well as flex space take up due to low cost of living, reduced CAPEX and work-from-anywhere trend. Emerging hubs, such as Jaipur, Ahmedabad, Indore, Coimbatore, are likely to witness rise in flex space and start-up occupancy as entrepreneurs are increasingly leveraging these locations to launch operations, the report noted.