2018 has been nothing short of a landmark period for co-working spaces in India making it one of the biggest flexible space markets in APAC with a massive growth of 50% from 2017, 15 mn. sq. ft. of flexible space absorption till 3Q 2018. The year has witnessed substantial growth with corporates, SMEs and start-ups transitioning from conventional Indian offices to co-working spaces at quite an impressive pace.
The perception of working out of co-working spaces has changed dramatically and contrary to popular view, several leading enterprises and mainstream corporate firms now actually form 40–45 percent of the co-working space demand in India, as opposed to just 15-20 percent by freelancers and startups. Among all the metros, Bangalore and Delhi-NCR were the largest markets with a combined share of almost 55 percent. This momentum is expected to fuel the growth 3X by 2021, with adequate infrastructure and evolving business requirements across various cities giving the entire segment a major push and facilitating its development.
Co-working players have bridged the gap between supply and demand mismatch in the past 3 years by providing innovative and affordable solutions to the market. Domestic players have been leading the industry with 68 percent of the total flexible space stock in India, while the portion of shared workspaces as part of total office absorption doubled from 5 percent in H1 2017 to 10 percent in H1 2018. The conversion of fixed costs into operational costs for businesses has been instrumental in enhancing the appeal of co-working spaces for various organizations, who now perceive co-working as an extremely viable alternative over conventional offices.
With enhanced innovation and productivity at the core of its service domain, shared workspaces have successfully filled the gap in the Commercial Real Estate sector in India by opening avenues for easy access to Grade A infrastructure across the country. As one of the early entrants in the market, Awfis has led this ‘Uberisation’ of Indian office spaces for SMEs & start-ups by providing Grade A shared workspaces at affordable prices.
Tier II markets, rising with the budding entrepreneurial spirit and growing economies, are also giving the segment further impetus to facilitate the growth of co-working across the country, with reports suggesting that Tier 2 markets are projected to grow to 8.5mn seats by 2020. Awfis, identifying this very need, has already opened centres in Tier II cities such as Chandigarh & non-metros like Pune while it plans to unveil more centres in cities like Ahmedabad, Bhubaneshwar, Kochi and Indore to facilitate a countrywide expansion.
2018 has also seen few co-working space providers not limiting to only conventional assets but also aggregating unused spaces in shopping malls, hotels, and educational institutes. With appropriate amenities and infrastructure, such unconventional assets are growing in popularity for setting up chic shared workspaces.
2019: Co-working as the Propeller of CRE in India
Co-working in 2019 is expected to witness a sharp growth by roughly 4x – 8x of the current size of the industry. Strengthening the key pillars of workplace strategy – Technology; Innovation; Cost Management; Talent Acquisition & Retention; Design & Space Planning, the next 12 months are expected to pave the way for another wave of tremendous growth towards the shared workspace segment.
Millennials, having formed 1/4th of the working population in India, will be the key drivers in pushing more and more corporates to enhance workplace experience and improve the work environment. Coworking will provide unparalleled solutions at affordable prices, to become an even more attractive proposition to the large workforce segment of India’s Gen Z population.
Coworking spaces will furthermore increase flexibility by providing distinctive amenities catering to the customized needs of clients to differentiate from the competition. There’s also an interesting shift in the way co-working spaces are taking up HR functions and hosting events like stand-up comedy shows, contests etc. and opening up opportunities for members to partake in CSR drives. Technology will play a pivotal role in optimizing space usage along with promoting productivity and collaboration.
In the past few years, coworking has grown by leaps and bounds in not just being recognized as a viable alternative to conventional offices but has become a new normal. In a way, coworking has become more than just a disruptor for CRE. It is now a fundamental part of the CRE market and a full-fledged sector in its own right, giving tough competition to traditional office spaces. We can most definitely say that shared workspaces are here to stay, and it will be interesting to watch the new trends in this space in 2019.
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