How Smartworks Rethought the Enterprise Office
Smartworks saw a mismatch between India’s fragmented office supply and the needs of large companies. Its answer was to lease entire buildings, turn them into managed campuses and build the business around enterprise customers. A new MIT Sloan Management Review India case study examines how that model developed and whether its advantages can endure.
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Neetish Sarda was a student when he visited the American campuses of Google, Microsoft and Amazon. What held his attention was not the desks. It was the idea that a workplace could contain a gym, a cafeteria and gaming zones, and that people would willingly spend ten hours there.
“I saw the Google, Microsoft, Amazon campuses in America and I was mesmerized,” he said. “People could spend ten or twelve productive hours there. India had nothing like it. That gap was the opportunity.”
In India, Sarda had seen that model largely on the captive campuses of major employers, often spread over 10 or 20 acres. He saw little comparable in a single commercial building.
But the problem was larger than the absence of campus-style amenities. India’s office market was fragmented on the supply side, while its biggest occupiers were large, organized enterprises that often had to work with different developers, contractors, service providers and internal teams as they expanded across cities. Sarda and co-founder Harsh Binani saw an opportunity to sit between those two sides, turning buildings into managed workplaces that companies could use without having to build and operate them themselves.
In the spring of 2018, Sarda and co-founder Harsh Binani signed the lease on a building of roughly 300,000 square feet in Bengaluru. They took the whole building, not another floor of desks, and fitted it out as a campus. It got a gym, gaming zones, a medical center and a cafeteria seating 400 to 500. Sarda moved his base from Delhi to run it. Filling it to 90% occupancy took 18 months. It has not dropped below that since.
Co-working had reached India as a category in 2015, and Smartworks started inside it. By 2019 the founders had made a second decision, less visible from outside and at least as important. They concluded that the startup-facing model would not scale. Startups bought on price and moved often. Large companies needed offices for years and asked for far more.
Binani described where the rethink started. “Co-working as an idea worked well in the US. But when we looked at India, both the supply and demand sides were fundamentally different. We had to go back to the whiteboard.”
The new MIT Sloan Management Review India case study, Smartworks’ Building Bet, examines how the founders turned that diagnosis into a managed-office model built around large buildings and enterprise demand, and asks whether the advantages created by that model can endure. By June 30, 2026, the company had 16.9 million square feet across 70 centers in 15 cities in India and Singapore, with capacity for more than 381,000 seats including its pipeline.
Whole buildings changed the supply economics
Much of India’s office stock belongs to families, professionals and businesses rather than to institutional developers. Those owners hold decent assets without the leasing relationships or the operating machinery to attract large corporate tenants.
Smartworks went after that supply. It leased whole buildings on long terms, fitted them out and ran them as managed campuses. The landlord got one tenant across most or all of the asset. Smartworks got leverage on rent and control of the design.
By March 2026, about 65% of its leased area came from non-institutional landlords. The remaining 35% came from institutional developers including DLF, Hiranandani, Tata Realty, Mindspace and Panchshil, relationships that gave the model access to some of India’s largest commercial-property owners as it scaled.
Sarda puts the customer side plainly. “In India, the friction to create your own office is so high: every city needs a separate developer, a separate set of service providers, a large admin team. If someone can remove all of that and save you money, you should outsource it.”
Free Download: How Smartworks Rethought the Enterprise Office
Cost carries the argument. The case cites rental savings of 15% to 20% from volume commitments, and budgeted fit-out capital expenditure of about Rs.1,350 per square foot as of March 2025. The industry benchmark was about Rs.2,400, according to CBRE data cited in Smartworks’ Red Herring Prospectus. Historical Smartworks fit-out costs disclosed in the prospectus sit in a similar range.
The amenities are not the main point. Gyms and cafeterias are relatively easy to copy. What matters is whether Smartworks can keep buying, fitting out and running large buildings cheaply enough to undercut what a company would spend on its own office.
Roughly 65% of total area now sits in properties above 300,000 square feet. Individual buildings run as large as roughly 800,000.
Smartworks turns down far more buildings than it signs
Whether that supply stays available at workable rents is one of the assumptions the case study leaves open. Sarda offered a number for it.
The company tracks more than 300 buildings across India at any given time. It negotiates on about 50. It signs eight a year, which is all its growth target requires at building sizes of 400,000 to 500,000 square feet.
Three kinds of assets feed that pipeline. New buildings coming to market, buildings falling vacant, and buildings where an occupier wants to shrink and would rather hand the surplus to a single operator. That selectivity is part of how Smartworks says it achieves the 15% to 20% rental savings cited in the case.
Enterprise contracts narrowed a core flex office risk
Flex operators take space from landlords on long leases and let it to clients for shorter periods. The risk is built into the model: clients can leave, but the rent owed to the landlord remains. That mismatch has undone operators before.
Smartworks narrowed it by selling to enterprises on multi-year lock-ins.
Enterprise customers accounted for about 92% of rental revenue in Q4 FY26. Clients above 300 seats produced roughly 69% of FY26 rental revenue and stayed about 47 months on average. Clients above 1,000 seats went from 12% of rental revenue in FY22 to 37% in FY26, with lock-in periods lengthening from 27 months to 36.
As of March 2026, committed lock-in revenue on the mature 8.9 million-square-foot portfolio covered committed lock-in rent about 2.6 times. Across the full 10.1 million square feet of operational space, the ratio was about 2 times. The company says contracted revenue provides coverage against those lease obligations through FY29 at current levels.
By the end of June 2026, contracted rental revenue stood at roughly Rs.5,400 crore, and clients above 1,000 seats accounted for about 41%.
The contracts narrow the gap. They do not close it. Landlord leases remain obligations, and occupancy and renewals still decide whether the arithmetic works.
A growing share of demand is now coming from existing clients. Sarda said expansions by current customers account for about 40% of new demand. FedEx, for example, started with 200 seats in Bengaluru, expanded there to around 700, and now occupies Smartworks offices in five or six cities.
Covid forced capital discipline
The pandemic provided the first major test of the enterprise thesis.
Enterprise customers kept paying through the disruption. Smartworks says the more durable change was in how corporate buyers viewed flexible space: less as a stopgap and increasingly as an infrastructure choice.
Equity, meanwhile, flowed toward digital businesses, while physical workspace operators found it far harder to raise capital.
“Overcapitalisation is poisonous,” Binani said. “We saw what happened globally. We were pushed to be more and more capital efficient. And that capital efficiency became one of the foundations of what we built.”
The constraint shaped what came next. Instead of treating equity as the fuel for growth, Smartworks began arguing that contract durability, operating cash flow and returns on capital would fund the expansion themselves.
Margins improved as centers matured. Accounting profit took longer to catch up.
Revenue from operations rose 31% to Rs.1,796 crore. Normalised EBITDA rose 75% to Rs.314 crore. The normalised EBITDA margin went from 13.1% in FY25 to 17.5% in FY26, and 19% in the fourth quarter. Full-year normalised return on capital employed rose from 7.3% to 16%. The year closed with net cash of about Rs.56 crore.
Maturity explains much of it. After a year of operation, a center’s costs are largely fixed, so higher occupancy flows more directly to margins.
Reported profit after tax was Rs.11 crore, the first full year of reported profitability under Ind AS. The normalised measures, which make adjustments for the effects of Ind AS 116 lease accounting, present a considerably stronger picture of the business. For investors, that gap matters because the long-term lease obligations behind the business do not disappear with the accounting adjustment.
GCCs bring the growth and the risk in the same package
GCCs leased a record 31.4 million square feet of office space in India in 2025, accounting for 37.7% of gross leasing activity, according to JLL. They produced more than 15% of Smartworks’ rental revenue in FY26 and about 21% in Q1 FY27.
The pitch to them is time. Setting up a GCC on a conventional lease takes 12 to 18 months. Smartworks says it can hand over a large managed office in 45 to 60 days, and hold several thousand people on a single campus.
That same concentration is the exposure. If AI changes GCC hiring, or the mix of roles, or the space each employee needs, managed-office demand moves with it.
The case also cites forecasts suggesting stronger demand ahead, including Redseer’s projection of roughly 79 million square feet of additional AI-driven office demand in India between 2025 and 2030. But projections are not guarantees.
AI is one uncertainty among several. Smartworks has to keep finding large buildings at workable rents, hold occupancy as new centers mature, keep capital discipline as the pipeline grows, and defend its execution advantage as institutional money arrives in managed offices. The case study names each as an assumption still to be tested.
Binani’s answer is that the buildings themselves are the defense. “Large campuses like these are not going to come in the next fifty years. Your cost structure is the lowest. You are serving the world’s best companies.”
The whole-building bet was good enough to build a listed company on. What remains unsettled is whether the position it created is harder to copy than it was to build.
Read the full case study.
