Office space investment is the middle ground of commercial real estate: better yields than retail, less complex than industrial, and directly powered by Pune’s exploding IT sector.
But it’s also increasingly disrupted by co-working spaces, flexible work arrangements, and post-pandemic remote work.
This guide analyzes traditional office investment vs emerging co-working opportunities.
The Pune IT Boom: Demand Driver
Pune’s IT Industry Growth
Current snapshot (2025):
- IT companies in Pune: 800+ companies
- IT workforce: 1.2+ million employees
- Major companies: Infosys, TCS, Wipro, HCL, Tech Mahindra, Accenture, Capgemini
- Additional hubs: Startups, consulting firms, GICs (Global In-house Centers)
Growth trajectory:
- 2015: 500K IT workers
- 2020: 850K IT workers
- 2025: 1.2M IT workers (projected)
- 2030: 1.5M+ IT workers (expected)
Implication: 200-300K additional IT workers coming in 5 years = massive office space demand.
Where IT Workers Work (Office Space Types)
Traditional corporate offices:
- Large companies (TCS, Infosys, Wipro)
- Average office size: 50,000-500,000 sq ft per location
- Lease terms: 5-10 years, annually escalating
- Rent: ₹60-100 per sq ft/month
- Occupancy rate: 40-60% (post-pandemic, now normalizing)
Co-working spaces:
- Emerging model (WeWork, Awfis, IKO, NxtWkz)
- Average space size: 500-5,000 sq ft per user company
- Lease terms: 3-12 months (flexible)
- Rent: ₹1,000-2,000 per seat/month
- Growth rate: 40-50% annually (fastest growing)
Start-up hubs:
- Entrepreneurship centers, incubators
- Size: 100-1,000 sq ft
- Rent: ₹50-80 per sq ft/month
- Growth: Fast (supporting ₹100B+ startup ecosystem)
Traditional Office Space Investment
Economics of Office Space Purchase
Example: Hinjewadi office space
- Location: Hinjewadi (IT park, near Infosys, TCS headquarters)
- Property size: 1,000 sq ft (small office, typical for individual investors)
- Purchase price: ₹80L (₹8,000 per sq ft, market rate 2025)
- Lease rate: ₹60 per sq ft/month = ₹60K/month
- Annual potential rent: ₹7.2L
Cost breakdown:
- Property tax: ₹3K/month = ₹36K/year
- Building common charges: ₹5K/month = ₹60K/year
- Maintenance/contingency: ₹2K/month = ₹24K/year
- Vacancy allowance (10%): ₹72K/year
- Total annual costs: ₹1.92L
Net income:
- Gross rent: ₹7.2L
- Costs: ₹1.92L
- Net income: ₹5.28L/year = 6.6% net yield
Comparison to residential:
- Residential: 4-5% yield
- Office space: 6-7% yield
- Advantage: 2% higher yield than residential
Best Office Locations in Pune
Tier 1: Premium IT Park Areas (Highest Demand)
Hinjewadi:
- Occupancy: Major IT companies (Infosys, TCS, others)
- Office price: ₹7,000-10,000 per sq ft
- Lease rate: ₹55-75 per sq ft/month
- Gross yield: 7.9-12.9%
- Net yield: 5-8%
- Appreciation: 4-5% annually
- Why premium: Cluster effect, major company presence, developed ecosystem
- Risk: Slightly lower appreciation than emerging areas (mature market)
- Tenant quality: Excellent (IT companies, stable)
- Vacancy rate: 10-15% (reasonable for IT sector)
Koregaon Park:
- Occupancy: Startups, consulting firms, creative agencies
- Office price: ₹6,500-9,000 per sq ft
- Lease rate: ₹50-70 per sq ft/month
- Gross yield: 8-12.8%
- Net yield: 5.5-8%
- Appreciation: 4-5% annually
- Why good: Startup hub, vibrant ecosystem, good connectivity
- Advantage: Higher-quality tenants (professional services), lower vacancy
- Risk: Faster disruption from co-working spaces
Viman Nagar:
- Occupancy: Services companies, smaller IT firms, BPOs
- Office price: ₹5,500-8,000 per sq ft
- Lease rate: ₹45-65 per sq ft/month
- Gross yield: 8.1-14.1%
- Net yield: 5-9%
- Appreciation: 4-5% annually
- Why good: Good value, reasonable rent, accessible entry price
- Advantage: Still developing, better appreciation potential
- Risk: Lower tenant quality than Hinjewadi
Tier 2: Secondary Office Areas
Aundh, Kharadi (mixed use areas):
- Office price: ₹5,000-7,000 per sq ft
- Lease rate: ₹40-60 per sq ft/month
- Gross yield: 8.6-14.4%
- Net yield: 5.5-9.5%
- Appreciation: 3-4% annually
- Challenge: Less pure office demand (mixed residential area)
- Benefit: More stable occupancy from mixed tenant pool
Office Lease Dynamics (Key Investor Considerations)
Challenge 1: Corporate Lease Cycles
IT company lease patterns:
- New company enters Pune, commits to 200,000 sq ft for 7 years
- Year 1-3: Full occupancy, stable rent payments
- Year 3-5: Company growth/consolidation, may need more or less space
- Year 5+: Lease renewal negotiation (tenant holds leverage)
As landlord, you’re vulnerable to consolidation:
- Company uses only 80,000 sq ft instead of 200,000
- Wants rent reduction for underutilized space
- Threatens to relocate if you don’t negotiate
- You either accept lower rent or face vacancy
Challenge 2: Rent Escalation Clauses
Typical office leases have escalation:
- Year 1: ₹60/sq ft/month
- Year 2: ₹62/sq ft/month (3.3% escalation)
- Year 3: ₹64/sq ft/month
- Year 4: ₹66/sq ft/month
- Year 5: ₹68/sq ft/month
But market dictates actual rent:
- If market softens (recession, company exodus), tenant renegotiates
- “Market rent dropped to ₹55/sq ft, we want lease at ₹55 or we relocate”
- Landlord forced to accept or face vacancy
Challenge 3: Flexibility Pressure
Post-pandemic work trends:
- Companies want flexible space, not fixed 5-7 year commitments
- Hybrid work (3 days office, 2 days home) reducing space needs
- Co-working spaces offering 3-12 month terms (vs 5-year traditional)
- IT companies increasingly prefer co-working flexibility
Your tenant might demand:
- Flexible lease (1-2 years instead of 5-7)
- Lower commitment levels
- More amenities (fitness, cafeteria)
- These reduce your yield (shorter lease = re-leasing risk)
Co-Working Space Investment: The Emerging Model
What is co-working:
- Shared office space with flexible lease terms
- Provided by operators (WeWork, Awfis, NxtWkz, IKO)
- Users rent individual seats/cabins (₹1-2K per seat/month)
- Includes common areas, reception, IT infrastructure
Growth of co-working in Pune:
- 2015: Nearly non-existent
- 2020: 500K+ sq ft
- 2025: 3-4M sq ft projected
- CAGR: 40-50% annually
Investing in Co-Working Spaces
Option 1: Buy Space and Lease to Co-Working Operator
- You buy office space: ₹80L for 1,000 sq ft
- Lease to WeWork (or similar), 3-year term
- WeWork pays you ₹70/sq ft/month (₹70K/month)
- Yield: 8.75% gross, ~6% net
- Your role: Passive landlord
Risk: Co-working operator is single tenant. If WeWork closes/relocates, you’re vacant.
Option 2: Invest in Co-Working Space Operator
- Invest capital into co-working operator company
- Share revenue from space
- Operator handles tenant acquisition, management
- Your return: % of revenue (typically 8-15% if successful)
Opportunity: Co-working expanding fast, well-executed operators returning 12-15% annually
Risk: Operator failure (many co-working operators failed post-pandemic), unproven model
Option 3: Buy and Operate Your Own Co-Working Space
- Purchase space: ₹80L for 1,000 sq ft
- Fit-out/setup: ₹15-25L (reception, furniture, IT, amenities)
- Lease 8-10 seats at ₹1,500/seat/month = ₹12-15K/month
- Additional: Common area, small meeting rooms, kitchen
Revenue:
- 10 seats × ₹1,500 × 12 months = ₹1.8L/year
- If 50% occupancy: ₹0.9L/year (year 1, ramping up)
- If 80% occupancy: ₹1.44L/year (mature operations)
Costs:
- Receptionist/management: ₹2-3L/year
- Utilities, maintenance, cleaning: ₹1-1.5L/year
- Internet, common area upkeep: ₹0.5L/year
- Building costs, property tax: ₹1-1.5L/year
- Total costs: ₹5-6.5L/year
Problem: Your ₹1.44L revenue barely covers ₹5L+ costs = negative return!
Reality: Co-working operators barely break even or operate at loss (WeWork famously unprofitable). Requires 70%+ occupancy and premium pricing (₹2,000+/seat) to be profitable.
Best Office Space Investment Approach
Strategy 1: Conservative (Best for Most Investors)
- Buy office space in established area (Hinjewadi)
- Lease to stable IT company or co-working operator
- Collect 6-7% yield
- Accept 3-5% appreciation
- Hold 10+ years for wealth compounding
Expected 10-year return:
- Property appreciation: ₹80L → ₹120L
- Rental income: ₹50L collected (net)
- Total wealth: ₹170L from ₹80L = 112% return = 8% annualized
Strategy 2: Growth (Higher Risk)
- Buy office space in emerging area (Koregaon Park, Viman Nagar)
- Mix of stable tenants and startup tenants
- Accept 2-3 year vacancy risks
- Aim for 5-6% appreciation + 6-7% yield
- Higher variance but higher long-term returns
Expected 10-year return (accounting for 2 years vacancy):
- Property appreciation: ₹60L → ₹96L (best case emerging area growth)
- Rental income: ₹40L collected (net, accounting for vacancy)
- Total wealth: ₹136L from ₹60L = 127% return = 8.3% annualized
Strategy 3: Hybrid (Balanced)
- 60% capital in established office areas (Hinjewadi): steady yield
- 40% capital in emerging areas (Koregaon Park): growth potential
- Portfolio yield: 6.5% (blended)
- Portfolio appreciation: 4.5% (blended)
- Balanced risk profile
