In line with the global uptrend, the Indian co-working segment is also growing at a scorching pace, becoming one of the fastest moving categories within commercial real estate in India. At the end of 2019, just before the pandemic, the Indian co-working and flexible office segment comprised close to 471,000 seats spread across 30 million square feet, as per research by JLL, a leading global real estate advisory.
Meanwhile, during the pandemic, despite initial hiccups and set-back, the segment played a critical role in the recovery of the real estate market, offering occupiers much-needed relief and flexibility. By the mid of June 2022, the total seats in the co-working and shared office segment reached 680,000. It is estimated that by 2025, the number of seats will cross 1 million.
India today just like other major economies such as the UK, USA, Hong Kong, Russia, Canada, etc. is one of the major co-working markets in the world. Nakul Mathur, MD, Avanta India shares how co-working spaces became a sustainable lifestyle choice for India Inc.
A flexible and sustainable choice
In the past, shared workstations were mainly preferred by start-ups, freelancers, and other small business enterprises. However, the occupier’s profile is now transforming with an increasing number of MNCs, big IT companies, BFSI enterprises, family offices, etc. opting for shared spaces.
Co-working offers a flexible and sustainable alternative to occupiers’ demands. Occupiers do not need to spend a huge amount in leasing office spaces in CBDs and then further spend in making it ready for day-to-day operations. On the contrary, they can lease seats as per their requirements in a nearby co-working premise and pay subject to the total usage. This protects tenants from incurring high cost unnecessarily, optimize their real estate spending, and focus more squarely on their key business activities.
The uptrend of co-working and shared offices is also in sync with flexible and remote working, which is increasingly becoming popular in the wake of the pandemic. A large portion of the workforce in many organizations is still working remotely, which also entails that instead of leasing out a regular Grade-A or B-type office premise, the occupier can opt for a relatively smaller flexible workspace and accordingly use it. In the future, if they have to upscale (or downscale) as per the requirement, it can be done in a hassle-free manner.
The leases are also very flexible in co-working offices and are mostly in the range of 9-12 months. Meanwhile, in regular office set-ups leases can go up to 5-9 years.
Many large corporates are even now leasing centers in smaller cities such as Lucknow, Indore, Coimbatore, Vizag, etc. It is estimated that close to 40% of the workforce in large tech and IT companies are still working remotely and this also entails a growing concentration of WFH workforces in such smaller cities.
To cater to such a workforce, big corporates are now opening new shared office centers in Tier 2 and 3 cities. This helps the workforce to get a break from continuously working from home and operate from a more professional workstation.
Recently, Amazon and Accenture have opened centers in Indore and Coimbatore. In the times to come a sizable part of the demand for co-working spaces will emanate from smaller cities and towns.
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Enhanced Individual productivity and networking opportunities
As large corporate and business owners are lured toward the shared office segment, it is also eventually helping the sector to enrich and enhance its offering. In the past, most of the shared office premises mostly included a café, meeting rooms, and hangout corners. Meanwhile, as the client profiles are changing, co-working players are also stepping up their game and adding new layers of services such as numerous games and fitness facilities, entertainment zones, networking and collaboration spaces. Consequently, this now helps employees to relax better, take timely breaks, and optimize their overall productivity.
Another important benefit of co-working spaces is that it nurtures meaningful interaction between employees. Interestingly, in a shared space one gets a lot of opportunities to network and interact with employees, partners, and leadership of other companies and industry verticals. This helps in their holistic and all-around growth and development, which is much needed in the current market scenario.
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