A report from one among India's leading International property consultants finds that the country may soon witness a revolution in the culture of co-working.
While co-working may have initially been the domain of the quintessential start-up, SMEs and the freelance Gig economy which needed flexibility of tenure as well economical rentals, such advantages have come to the notice of the more established and mainstream occupier.
In fact the co-working demand is expected to triple in the coming three years.
In its report, titled, 'Co-working: The office of the future', the consultancy lists the key observations. Here are some of them:
India, today, is witnessing a proliferation of start-ups and SMEs, buoyed by the government’s concerted efforts to create a sustainable ecosystem for entrepreneurs in the country. Due to the changing perceptions of the office, the workplace is now being looked at as an environment that needs to be managed and optimised.
The number of co-working spaces across the globe has grown by 3,050% (600 centres to 18,900 centres) since 2010 while the number of people working in these facilities has exploded by close to 8,000% by growing from 21,000 seats to 1.7 mn seats in the same period, according to Statista Dossier.
There are close to 200 co-working players running an estimated 400 shared workspaces across the country today, compared to just Regus and few localised players in 2010 running less than 30 such centres.
While Regus is the most established and largest shared workspace operator in the country today with approximately 0.19 mn sq mt (2 mn sq ft) and 20,000 seats under operation, WeWork and CoWrks are among the newest and most aggressive players in the co-working space
Private Equity players have also been looking to invest in co-working startups. One prominent example is that of Sequoia Capital that invested $ 20 million in mid-2017 in coworking space start-up, Awfis.
While co-working companies accounted for just under 0.17 mn sq. mt. (1.8 mn sq. ft.) of the 3.81 mn sq. mt. (41 mn sq. ft.) annual commercial office space transactions volume, the expansion plans of major players and the increasing appetite for this format from occupiers, property owners and co-working operators should see annual transaction numbers triple from current levels over the next 3 years.
- 2017: 0.17 mn sq. mt. (1.8 mn sq. ft.)
- Q1 2018: 0.19 mn sq. mt. (2.0 mn sq. ft.)
Currently, NCR, Mumbai and Bengaluru house most of the co-working stock in India followed by Pune and Kolkata. Major 5 players namely Regus, WeWork, Cowrks, Awfis and Smartworks have 0.79 mn sq mt (8.5 mn sq ft) operational space; with plans for additional 0.65 mn sq mt (7.0 mn sq ft) by 2020.
While co-working companies took up a modest 0.17 mn sq mt (1.8 mn sq ft) in 2017, the first quarter of 2018 itself has exceeded the annual tally of 2017. Q1 2018 witnessed transactions to the tune of 0.19 mn sq mt (2.0 mn sq ft). In Q1 2018, the highest co-working transaction activity was witnessed in Bengaluru, NCR and Hyderabad markets, which contributed 43%, 16% and 15% respectively.
Dr. Samantak Das, Chief Economist and National Director - Research, Knight Frank India, said “Due to the changing perceptions of the office, the workplace is being viewed as an instrument that could drive a dynamic and vibrant culture of corporate productivity impacting the financial, cultural and environmental ethos of the organisation. This far reaching agenda warrants an element of specialisation. The co-working operator is filling this niche and is fast being regarded as a specialist in workplace management who can cultivate an environment of collaborative enterprise that yields tangible benefits to the occupier."
"The fact that large Indian corporates today constitute approximately 50% of the co-working operator’s overall client roster bears testament to its increasingly widespread acceptance among mainstream occupiers. While co-working companies took up a modest 0.17 mn sq mt (1.8 mn sq ft) in 2017, the first quarter of 2018 itself has exceeded the annual tally of 2017 at (0.19 mn sq mt) 2 mn sq ft. The expansion plans of major players and the increasing appetite for this format from occupiers, property owners and co-working operators should see annual transaction numbers triple from current levels over the next 3 years," he adds.
Viral Desai, National Director – Occupier Solutions Group at the consultancy further explains that co-working has come from being a "on the fringes" kind of short-term solution to being considered as a real estate solution.
He details, "Flexibility to scale up and down, ease of transaction in terms of a single cheque, no hassle of fit outs or dealing with multiple vendors and reduced legal and compliance risk are some of the factors that have paved the way for co-working."
Desai thinks that there is ample discussion on whether this need for co-working will soon replace traditional office spaces. He adds that both are complementary and not conflicting, but there are two challenges looming large.
"One is that they (occupiers) are buying long and selling short hence the financial risk and the second is not meeting customer expectation thus leading to erosion of value associated with a negative or declining customer experience,” adds Desai.