Pune: an emerging flex space hub in India

Pune has grown significantly in the last five years to become an emerging flex space hub in India with great potential to grow further.

May 16, 2023

Co-working spaces or flex spaces in India have gone from being preferred by freelancers and small startups to becoming a choice of large corporates. They have evolved considerably in the last five to six years. Starting from a plug-and-play co-working set-up offering limited customisation to the users, operators nowadays are creating managed offices for MNCs with significant space requirements.

Over the years, the co-working sector has adapted to the changing trends, making it more attractive over a conventional office space. The growth of this sector was quite strong post-pandemic, with cities such as Pune emerging as significant co-working locations.

Pune witnessed remarkable growth in the flex space footprint. The share of co-working operators leasing office space in the city grew from 12% in 2017 to 31% in 2022. The flex space stock in Pune has grown from less than 1 million sq ft in 2017 (6.6% of the India flex space stock) to over 6 million sq ft in Q1 2023 (11.5% of the India flex space stock) – a 7.5X growth.

Figure 1: Share of co-working sector in the Gross Leasing Activity of Pune

Source: JLL Research, 1Q23

Figure 2: Pune’s share in India Flex Stock

Source: JLL Research, 1Q23

The pandemic altered the work culture of many companies as the concept of remote and hybrid working became popular. In times of uncertainty, companies were looking for a flexible work set-up that allowed them hassle-free scaling up or down, along with shorter lock-in periods compared to conventional offices. Another important factor that makes flex spaces attractive is that companies do not need to invest in capex involving fit-outs and other amenities.

Co-working operators are shifting towards providing a more tailor-made product to occupiers in the form of managed offices. Smartworks, Table Space, Indiqube, AWFIS and WeWork are among the top five co-working players currently operational in Pune, accounting for 62% of the total flex space stock in the city. Locations like Baner and Balewadi in West Pune have seen a striking growth in the flex space stock, followed by Viman Nagar and Kalyani Nagar in the East. Baner and Balewadi together make up around 35% of the total flex space stock in the city.

Figure 3: Distribution of Flex space stock in Pune

Source: JLL Research, 1Q23

Leasing of seats in flex spaces has seen tremendous growth in Pune in the last two years. In 2021, ~19,000 seats were leased in the city, which grew by 30% to ~25,000 seats in 2022. Most of this demand is driven by the IT sector, followed by manufacturing, industrial and consultancy businesses. There is an obvious acceptance of co-working set-ups by large corporates such as Google, which has opened its first office in Pune in a managed co-working space which will house over 1,300 employees. Pune has seen phenomenal growth in demand, and subsequently, we observe a robust supply of flex spaces, which is expected to continue growing in the future as well.