Startups

scale up
Feb 2022
 02

India has always been a land of new ideas,

opportunities and entrepreneurship. From
manufacturing startups in the new Independent
India to trading and IT startups over the
decades, Indians have famously given birth to
top conglomerates from one big idea. Over the
last decade, startups have attained a new
meaning with technology as the overriding
theme.

India’s startup culture has become mainstream

now. Be it coffee conversations on funding, and
growth modelling or even a show on television,
startups occupy a major chunk in the Indian
discourse. The year 2021 has been a record year
for capital inflows and emergence of unicorns.

India’s economic future will draw heavily from

the dynamism and vibrance we see in today’s
startups. The government has provided
incentives for startups. Going ahead, significant
reforms for manufacturing startups can go a
long way to aid economic activity, and boost job
creation. This can catapult India towards a more
robust startup ecosystem. As per World
Intellectual Property Organization (WIPO), India
ranked 46th in the Global Innovation Index. With
consistent efforts, India can rise up the
innovation chart.

From a real estate perspective, startups are

becoming a force to reckon with. As startups
continue to take up more space in commercial
offices, commercial real estate will have to adapt
to cater to the needs of startups. Managed
spaces are also observing more traction from
startups not only in metro cities, but in non
metro cities as well, as we see in the report.

Ramesh Nair
CEO | India &
MD, Market Development | Asia
Colliers
 03
02

As India undergoes an unprecedented

transformation – primarily “Digital Tech” in
nature, the Indian Real Estate Industry was
always expected to be one of the
beneficiaries of disruption. Indian office
markets clocked ~500msf of new office
space leasing in last 20 years. We foresee,
Indian office markets will lease the next
500Mn sqft in half the time over the next 10
years. And we believe Indian & Global
Start-ups will be right in middle of all the
action.

Keeping these facts in mind, CRE Matrix and

Colliers partnered together to figure how will
this surge in digitization translate into a
larger share of demand for office space
originating from Start-ups.

While this never-done-before research on

categorizing occupiers into different buckets
has been a herculean task, our findings have
proven our hypothesis – Start-ups are
making their presence felt in the commercial
office segment – at a growing pace.

Based on our research that has categorized

occupiers into different buckets, our analysis
clearly shows that Fortune 500 Companies
and other large companies’ segments are
plateauing with their occupancy annual
growth entering single digits. However, the
startups’ footprint has quadrupled over the
last five years, contributing 10% to office
occupancy today vs 3% in 2016.

We believe there are enough reasons for

this growth to continue over the next five
years, and that too at a higher pace.

Abhishek Kiran Gupta

Chief Executive Officer &
Co-founder
CRE Matrix
 04

1.1 Startups as an emerging

growth engine

Overview
3rd largest Ta
le n t p o o

l
India’s startup landscape startup ecosystem
has been prevalent for in the world with
decades, but the sheer
growth has been
50,000+ Over the years,
India’s growing
recognized startups 1

astounding in the last digitization,

n
ti o
ig
decade. Indian startups are it a l a d o p

D
wide and deep
becoming the flagbearers technology
for India’s services growth USD45.2 bn2 talent, and
story. Over the last decade, Total equity large
startups created 6.6 lakh investments in Indian consumption
direct jobs and 34 lakh startups in 2019-21 with
base have
2021 accounting for
indirect jobs2. Overall, the ol steered the
53% share
P

rt
ic y o
startup sector is maturing su pp growth of
with more depth in startups.
landscape and higher Moreover, the
corporate participation. As government
startups grow, the has rolled out
importance of the benefits to
s

1.7 lakh
on

workplace has become

Fu

nd ti encourage
in g o p
even more important. In growth of startups.
this report, we explore the number of jobs created
growth of startup and the by startups in FY 2020-211
u rc es
I n fr a st

impact on commercial
office sector.
so

uc
tu re & re
r

Key government incentives for startups1

• Exemption from Income tax for three out of ten years from the date of incorporation
• Government has allocated INR10,000 crore to fund startups through funds of funds scheme and INR 283 crores
under Startup India Seed Fund Scheme (SISFS)
• Digitization and fintech focus in budget 2022 is expected to give boost to startups
• Emergency Credit Line Guarantee Scheme (ECLGS) extended till March 2023. Under this, the government
provides emergency loan facilities to businesses that have suffered during the pandemic

1– DPIIT, Budget 2022 2-NASSCOM-ZINNOV


1.2 India’s startup
growth story
Wave 1: IT Services
1984 1988
GOI declared “Liberalisation of NASSCOM was
the Computer Industry” removing launched, to
various rules and regulations which support the
were previously imposed on the digital Industry
IT Industry. in India.
2008
During the Great
Recession, businesses
all around the world
began laying off
workers. Numerous
popular Indian startups
like PolicyBazaar and
Zomato were founded
Wave 3: Up the during this period.
innovation curve
2013
NASSCOM 10,000 startups
initiative provided access 2016
to a large network of
Startup India - Stand-up
investors, mentors, and
India, Attal Innovation
industry experts for
Mission was
startups.
established to provide
financial assistance,
easier work, networking
possibilities, and tax
exemption incentives.
05
1989 1999
Canbank Venture 100% Foreign
Capital Fund was Investment in IT
the first Public was allowed, while
Sector Bank to paving the way for
set-up Venture MNCs to enter
Capital Fund. India.
2000 Wave 2:
The Information
Technology Act was
Dot-com Era
enacted, granting legal
status to transactions
conducted through
electronic data
interchange and other
electronic means of
communication and
transactions.
2017 Present
The budget introduced 90 startups are as of
significant concessions for December 2021
startups: a)100% tax categorised as
exemption for 3 consecutive Unicorns among 50,000
financial years (b) abolition of recognized startups3.
angel investment tax; (c) Retail & Retailtech,
setting up of ‘fund of funds’ for Enterprise tech and
startups of up to INR10,000 cr Fintech account for
over a four year period; 60% of all startups.
3– Orios Venture partner- Indian tech Unicorn report 2021, DPIIT data and
Inc42 Indian Unicorn tracker
 06

1.3 Startups
going mainstream

Startups’ occupancy have grown at a 38% CAGR over last 12 years

India’s commercial office space has largely been dominated by global companies that account for more half of the
space across the country. Since 2016, startups expanded and started occupying key office space in the top cities.
While global companies, followed by Indian conglomerates, remain the largest occupiers of commercial office space,
startups are leasing space at a rapid pace. Startups have shown highest growth rate of 38% in the last 12 years in
total occupied space as compared to other office occupiers. This is not only led by rapid expansion of existing start
ups, but also new enterprises.

Occupier growth trends(2010-21) Occupier sector share (2010 & 2021)

CAGR
2%
Startups 38% Startups
10%

8%
Indian companies 20% Indian
Company 11%

29%
Global companies 19% Global
Company
31%

FORTUNE 20%
Fortune 500 Global 15% 500
Fortune
500 India
14%
INDIA

FORTUNE 41%
Fortune 500 India 16% 500
Fortune
500 Global
34%
GLOBAL

Source: CRE Matrix, Colliers Source: CRE Matrix, Colliers 2010 2021

Office space occupied by startups rose 3-fold in 5 years

In 2021, startups accounted for 10% of total occupied office stock

2021 10%
2020 9%
2019 8%
2018 6%
2017 4%
2016 4% 49.7 msf
2015 3% Space occupied by
2014 2% startups as of 2021
2013 2% across the top
2012 2% six cities
2011 2%
2010 2%
Source: CRE Matrix, Colliers
 07

Evolution of workplace preferences for startups

A friendly, Young startups (1-3 years)

collaborative and typically explore no-frills
innovative workplace flex spaces and grade B
enforces a young traditional office spaces High preference for
company’s culture fully-managed spaces
and flex spaces due to
lower capex and
flexible lease terms

As startups start expanding their Unicorns typically take

services and reach, they start up larger spaces of
preferring quality Grade A buildings about 45,000 sq feet for
with better wellness standards head offices

Startups’ occupancy to rise further by 2024

Growth of Flex space Unicorns

the sector
Scaling up of existing Flex space to see a Share of unicorns
startups in new sizeable share in will increase in
geographies startups’ leasing next 3 years

Startups to account for 13% of occupied

office stock by 2024
78.3 msf
Space occupied by
startups in 2024 F
49.7 msf
Space occupied by
startups in 2021
12.0 msf
Space occupied by
startups in 2016

Source: CRE Matrix, Colliers

Refer section “methodology and notes”
at end of the report for approach
 08

Startups on the way to become

key occupiers

The year 2019 saw the highest ever leasing by

startups led by strong expansion of
consumer-related startups. The year 2021, which
had the highest ever funding of startups, saw
office leasing rebounding. Early-stage startups
prefer central locations for their offices wherein
employees can commute via public transport. As
their business grows, and hiring increases, they
prefer taking up space in locations where they
can expand and increase area as per business
needs in suburban/peripheral locations.

New leasing by startups (msf)

30
22%
share of Startups in
1.3x total leasing in 2024
25

20

30%
15

10
increase in number of
5 transactions during
2019-21, over 2016-18
0 2010-12 2013-15 2016-18 2019-21 2022-24F
Source: CRE Matrix, Colliers
Note- Data pertains to top 6 cities- Bengaluru, Chennai, Delhi-NCR, Hyderabad,
Mumbai, Pune

Future demand drivers

FinTech Logistics
Space take-up
during 2022-24

Top startup sectors

that will drive EdTech
29 msf
>50% of the demand (Forecast)
in 2022-2024

FoodTech
HealthTech
 09

Spurt in unicorns steering

large office deals

The pandemic
India - 3rd largest unicorn hub in the world
accelerated the digital
adoption in India, and
Number of unicorns added every year added 46 unicorns in
2021, highest in any
46 year. Bengaluru is the
50
unicorn capital of
40 46 of 90 unicorns India, with the most
were added in 2021 unicorns based there,
30 followed by Delhi
(NCR) and Mumbai. In
20
12
2022, India has
9 10 already seen
10 4 emergence of ten
1 1 1 2 2 2
0 new unicorns in just
0 55 days.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Colliers, Inc24, Orios Venture partner

Unicorn leasing up by 77% in 2019-21

2.6
Unicorn leasing (msf)

1.5 11%
share in total startup
1.12 occupied space

0.02

2010-12 2013-15 2016-18 2019-21 Source: CRE Matrix

Source: CRE Matrix

Consumer
Services
Fintech and
Retail sectors
HealthTech FinTech Over the next few years,
account for
Others unicorns will require larger
44% of total
6%
4% 4%
spaces as they raise capital,
24%
unicorns EdTech
6%
increase their workforce and
(2021) expand their services. We can
7%
expect unicorns to take up
FoodTech
more spaces in Tier-1 as well
as Tier-2 cities, opening up
Media and 8% newer opportunities in
Advertising
20% commercial office leasing.
8% Retail and
Transport & RetailTech
Logistics

13%
Source: Others –PropTech, TravelTech, Gaming, Engineering & Manufacturing, and Consulting.
Colliers, Secondary sources Enterprise Tech
 10

1.4 Established startup hubs

see continued growth; fast
growth in 1.4.
emerging hubs

Established and emerging startup hubs

Bengaluru continues to
lead the market with a
34% share in leasing by
startups 2019-21. A
well-developed ecosystem,
deep technology talent,
and a culture of
entrepreneurship are
major factors attracting
startups here.
Delhi-NCR is amongst the fastest-growing market Mumbai has seen
in terms of leasing by startups. Delhi-NCR witnessed certain pockets of
a three-fold increase in startup leasing during startup activity over
2021 on a YoY basis. The region benefits from being the years. However,
a catchment for education institutions in the North relatively higher
and East India, and good infrastructure. rentals, and high cost
of living are often
seen as deterrents by
early-stage
companies.

Note: Numbers on the

map indicate share in
leasing during 2019-21
20%
period.

Delhi- NCR Lucknow

NH-8, Udyog Vihar, Noida
expressway, Sectors 1-10
Noida

Jaipur

Ahmedabad Kolkata

Indore 15%
18%
MMR 9%
Andheri East, BKC, Navi Mumbai Hyderabad
HITEC city, Gachibowli
Pune
Aundh-Baner, CBD, Kharadi share (2019
sing -21
Lea )
Goa
34% g share (2016
sin -1
4% ea 8
L

Bengaluru Leasing
Koramangala, HSR Layout, Indiranagar Chennai share
OMR, Guindy (2016-18)

Coimbatore

Kochi

Established startup hubs Emerging startup hubs Bengaluru Delhi NCR Hyderabad
MMR Pune Chennai
Source: CRE Matrix, Colliers
 11

Pandemic leading to new startup hubs

a
kat
Kol
Talent availability, deeper internet penetration and low cost of
living make a strong case for non-metro cities. The pandemic also
saw reverse migration, with people moving back to their
hometowns. This created more opportunities for startups solving

a
Go
local challenges. About 40% of the new startups founded in 2021
were from non-metro cities. This suggests the growing
prominence of startups in non-metro cities.
no

w
uck
L

i
ch
Ko
Ahm
eda
bad r
Jaipu
Coimb
atore Indore

2021
Share of startups in emerging hubs4
40%

820+
2018
2012
27% 2015 29%
23% Number of funded
startups based out of
emerging hubs4

Lower CAPEX and OPEX

Access to Distributed With the share of startups

skilled workforce rising, we foresee the creation
workforce through Hub
of a whole new ecosystem in
and spoke
Benefits of non metro cities. This will create
ample opportunities for
setting up offices
plug-and-play office providers
in non-metro
in non-metro cities. Non-metro
cities cities have begun to see a rise
Expansion Tapping local in flex office spaces, catering to
across business startups and regional offices of
geographies opportunities
larger companies. As of Sep
2021, the share of non-metro
cities in total flex stock stands
Low cost of living at 12%. We expect the share of
flex to rise in next 3 years, as
The funding of startups in non-metro cities saw an entrepreneurs are increasingly
increase during pandemic. During 2020 and 2021, leveraging non metro locations
startups funding was at USD620 mn. to launch operations.

4–NASSCOM-ZINNOV data, Emerging hubs include 11 cities with atleast

50 startups founded between 2011-21
 12

Leasing considerations

Location preference
Locations close to the
CBDs and in proximity to
established residential
areas are preferred by
startups. Locations close
to other companies,
Plug & Play offices
research institutes/
universities are ideal. High prices can be a
challenge for startups
since many are
constrained by limited
cashflows or access to
capital. Startups
typically prefer plug and
play flex space
Smart features
New Gen offices with smart
features, high speed
internet, printers, concierge Minimal lock-ins and
services, security and security deposits
housekeeping services etc. <100 employees –
6months-1 year lock-in
Standard deal size
>100 employees – 1-3
Early-stage startups -
year lock-in
5,000-10,000 sq ft
Late-stage startups – Collaborative culture
30,000 – 35,000 sq ft Informal spaces and
interactive areas in the
workspace

Scalability
Startups are volatile in nature
and may scale up and down
quickly. Hence, they prefer
spaces with expansion options
 13

Methodology & Notes

Definitions

Startup
A startup has been defined as an organization that is
i. Registered with DIPP as a startup or
ii. Established within the last 10 years and not a part of any other conglomerate or not a
subsidiary of a non-startup company within a specific paid-up capital range

Unicorn
A unicorn is a private entity with a valuation of USD1bn or more

Methodology

The data for this report has been sourced from CRE Matrix for deals above
10,000 sq feet of traditional office space in top 6 cities. The deals include all
registered office leases which have been executed since 2010, sized >10,000 sq
ft in chargeable area, in all grades of office buildings.

Cities covered
MMR (Mumbai,
umbai, Thane, Navi Mumbai), NCR (Delhi, Gurgaon, Noida), Bengaluru,
Hyderabad, Chennai and Pune.
Occupier categories
Occupiers have been categorized in the following buckets and are defined as
follows–
∙ Fortune 500 Global and Fortune 500 Indian companies- All companies on the
2021 list of Fortune 500 Global and Fortune 500 Indian Companies
∙ Global Companies – All companies which are headquartered and founded
outside India and do not feature in any of the Fortune 500 2021 lists or our
Startups list
∙ Indian Companies – All Companies founded and incorporated and
headquartered in India and do not feature in any of the Fortune 500 2021
lists or our Startups list

Sample size
More than 25,000 tenants occupying nearly 1,000 msf across top 6 cities. Of
this, tenants occupying more than 10,000 sq feet each, have been studied in
detail.
However, we have also extrapolated for tenants occupying less than 10,000 sf
to arrive at the overall leasing and occupancy levels (basis in-house Colliers’
data and inputs from office transactions teams). Hence the resultant numbers
are approximate and indicative in nature.

Outlook
Colliers has forecasted the leasing and resultant occupancy by startups for the
next three years basis a combination of quantitative and qualitative factors.
Broad assumptions have been made on the following levels (basis in-house
Colliers’ data and inputs from office transactions teams) -
a) Annual leasing trends by start-ups over the years
b) Outlook on overall leasing
c) Growth of unicorns
d) Average space take-up by unicorns and non-unicorns
e) Qualitative factors such as market sentiments, occupiers’
preferences
 14

For further information, please contact: For further information, please contact

Ramesh Nair Abhishek Kiran Gupta

CEO I India & CEO & Co-founder
MD, Market Development I Asia abhishekkirangupta@crematrix.com
ramesh.nair@colliers.com

Abhishek Tiwari
Vimal Nadar
Co-founder
Senior Director & Head of Research | India
abhishek@crematrix.com
vimal.nadar@colliers.com

Authors: Authors:

Vaishnavi Bala Pranav Bhalla

Assistant General Manager, Research | India North India Head
vaishnavi.bala@colliers.com  pranav@crematrix.com

Pallavi Kukdolkar Sunil Ramsay

Assistant Manager | Research | Pune Business Development
pallavi.kukdolkar@colliers.com sunilramsay@crematrix.com

Arun Kumar KR Pratik Mane

Associate| Research | Bengaluru City Lead - Pune
arun.kr@colliers.com pratik.mane@crematrix.com

Upasana Garg
Senior Analyst
Marketing & PR
upasana.garg@crematrix.com
Sukanya Dasgupta
Director
Marketing & Communications | India
sukanya.dasgupta@colliers.com

Design & Development

Satnam Singh
Manager
Marketing & Communication | India
satnam.singh@colliers.com
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