Unicorns logging in for larger office space

Getting Bigger

- Unicorns may lease 2.7 mn sft of office space yearly

- It'll be a 3-fold increase from the preceding 3yrs

- India home to 44 unicorns in 2021

- India already seen 15 new unicorns so far this year

- 555 districts had at least one new startup in 2021

Mumbai: Unicorns or startups with a valuation of $1 billion or more are likely to occupy about 14 million square feet (sft) of office space by 2024, a two-fold rise from the current level. This is led by large offices that unicorns are likely to lease across major markets of Bengaluru and Delhi NCR. Unicorns are likely to lease an average of about 2.7 million sft of office space annually across 2022-24 across the top six cities, a three-fold increase from the preceding three years. India has already seen about 15 new unicorns so far this year. India has become the third-largest startup ecosystem in the world after the US and China. Startups are growing at a frantic pace, especially over the last two years. Even now, despite slow funding since April, startups with the right product/service mix and value offerings continue to expand and grow.

As per the Economic Survey 2021-22 report, the number of newly recognised startups have increased to over 14,000 in 2021-22 from only 733 in 2016-17. In 2021, 555 districts had at least one new startup. Also, India had a record number of startups (44) reach unicorn status in 2021.

Over the years, the government has provided support to startups. Some of them include exemption from Income Tax for three out of ten years from the date of incorporation. Also, the central government has allocated Rs10,000 crore to fund startups through the funds of funds scheme and Rs 283 crore under startup India seed fund scheme (SISFS).

Moreover, the SAMRIDH scheme was introduced to help startups with development, growth, and product innovation. The initiative aims to accelerate around 300 startups by providing them with investor connect, customer connect, and other opportunities for global expansion in the upcoming three years.

Mostly the unicorns in the country are tech-driven cos who don't require much space even for office purpose in an era of work from hom.

Talking to Bizz Buzz, Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers, said: "It is true that most unicorns are tech-driven. However, we are seeing that despite a hybrid work scenario, these companies are leasing offices due to the sheer need for brainstorming and collaboration that offices enable. Such companies are looking for next-gen offices that foster collaboration and team bonding."

According to him, office space occupied by unicorns to more than double by 2024. Unicorns to occupy 14 mn sq ft of space by 2024. On the whole, startups are likely to occupy 78 million sq feet of office space by 2024, up from 50 million sq feet in 2021. Bengaluru continues to lead the market. At the same time, he went on, we are now staring at a funding slowdown in the space which is likely to be a short-term blip. We are likely to see enquires coming back into the market in a few months for flex space, as well as traditional space, especially from fintech, e-commerce and logistics startups.

Offices become even more crucial for startups wherein they are trying to set up and inculcate culture for the organization. Startups with a clear business model and good corporate governance will continue to grow and expand as the country's digital economy is strong. On the

whole, startups are likely to occupy 78 million sq feet of office space by 2024, a 16 per cent increase from 2021, the Colliers study says.

Bengaluru is top startup hub, followed by Delhi-NCR. Bengaluru remains the top start-up hub with a 34 per cent leasing share during 2019-22, with Koramangala, HSR and Indiranagar being the preferred locations for startups. A well-developed ecosystem, deep technology talent, and

a culture of entrepreneurship are major factors attracting startups to the city.

Delhi-NCR is amongst the fastest-growing market in terms of leasing by startups. Delhi-NCR witnessed a three-fold increase in leasing by startups during 2021 on a YoY basis.

Mumbai has seen certain pockets of startup 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 startups, non-metro cities are seeing growth in startup 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, and Coimbatore are likely to witness a rise in flex space and startup occupancy as entrepreneurs are increasingly leveraging these locations to launch operations.