Flexible workspaces, once viewed largely as an alternative to conventional offices, are becoming the core of corporate real estate, with enterprises increasingly using ready-to-use workplaces to reduce upfront costs and retain the flexibility to scale operations.
Flex leasing has grown at a compound annual growth rate (CAGR) of 24.5% since 2018, significantly faster than the 7-8% CAGR recorded by Grade A office leasing, according to property consultant JLL. The segment’s share of overall office leasing has risen from 19.8% in 2024 to 27% in the first half of 2026. Flex spaces emerged as the single-largest contributor to office absorption in Q1 FY27, accounting for 27% of total leasing. The segment leased 10.2 million square feet in H1 2026, up 52.7% year-on-year, and the full-year leasing is expected to reach 18-20 million sq ft, Rohan Sharma, senior director, research and REIS, JLL, said.
The shift is also reflected in the rapid expansion of supply. JLL estimates flex stock across the top seven cities at 98 million sq ft currently and says it could rise to around 137 million sq ft by 2028. Analysts at Kotak Institutional Equities put the stock at 103 million sq ft in 2025, up more than three-fold over the 33 million sq ft in 2020. They expect it to reach 169 million sq ft by 2028 and 236 million sq ft by 2030.
Capital Savings
The attraction for enterprises is increasingly economic and operational rather than simply the need for temporary space. Managed workspaces allow companies to avoid large fit-out costs, enter markets faster and add capacity without being tied to long real-estate cycles.
“For a 100,000 sq ft space, assuming Rs 5,000-6,000 per sq ft for good-quality fit-outs, the upfront expenditure of `50-60 crore is saved and converted to a rental model,” Sharma said.
Karan Virwani, managing director and CEO of WeWork India, said flex spaces are no longer being viewed as an alternative to conventional offices and are becoming a core part of enterprise real-estate portfolios. Large enterprises and GCCs increasingly want to scale teams quickly and access customised workplaces without building and operating them themselves, he said.
Rising Share in REIT Portfolios
The change is beginning to show up in REIT portfolios as well. Across Embassy, Mindspace, Knowledge Realty Trust and Brookfield REITs, flex operators’ share of rental exposure has risen from 1.4% in FY23 to 5.6% in FY26 and 5.8% in Q1 FY27, according to Kotak. Over the same period, the share of IT tenants fell from 42.4% to 30.5% and 28.3%, respectively.
Embassy REIT currently has around 12 flex operators, accounting for about 6% of its rental exposure, CEO Amit Shetty said. Its ITeS exposure has fallen from around 25% at the time of its IPO to nearly 8% currently, as the Reit has increasingly focused on GCCs, he said.
The next phase of growth, however, is likely to depend less on adding capacity and more on the quality, location and enterprise-readiness of flex inventory, Rajat Kapur, regional managing director at The Executive Centre, said.
With flex stock having tripled since 2020, the shift suggests that companies are increasingly treating a portion of office space not as a fixed real-estate asset to be built and managed themselves, but as a service that can be scaled with business needs.
Harsh Binani, co- founder, Smartworks says that increasingly,enterprises want the workplace delivered as a ready-to-use, scalable service that allows them to add teams quickly and expand across cities without recreating the infrastructure each time.
“That combination of speed, scalability and operating certainty is why managed workspaces are gaining share,” he said
Binani said they believe flex will continue to grow faster than the broader office market and become an increasingly important component of enterprise real-estate portfolios.
Smartworks is looking at a revenue growth of 28-30% in FY27.
According to Utkarsh Kawatra, CEO and co-founder, myHQ , H1 2026 was one of the strongest first half: about 1.91 lakh seats and 8.4 million sq ft leased against 5.4 million sq ft a year earlier, up 68 %on seats and 55 %on volume
Kawatra said ,”Stock has tripled for one simple reason: companies have permanently shifted a slice of their real estate from a fixed cost to a flexible one”, he said .