Co-working concept catching up in prime office realty market
Co-working, a western concept that involves various individuals or startups sharing a common workplace environment, is slowly catching on across prime Indian property markets.
“Though still very nascent, this category could prove to be a disruptor as bigger co-working players such as WeWork enter India and more such facilities prop up across cities,” said Ramesh Nair-CEO & Country Head, JLL India.
In terms of the number of seats available, around 9,600 are available at co-working facilities across the country. Out of the total absorption, Mumbai sprung a surprise with the highest absorption nationally, followed by Delhi-NCR, Kolkata, Bengaluru, Chennai, Pune and Hyderabad.
Delhi-NCR and Mumbai led the way in terms of seats available and were followed by Bengaluru and Kolkata, JLL India said. Hyderabad, which has a first-of-its-kind incubator space called the T-Hub, also has 750 seats. Currently, there is very limited supply of co-working spaces, but once the situation improves, the demand scenario is also expected to transform.
“Companies can make savings of up to 20-30% by working in a co-working space. Additionally, they can avail benefits of a new-age workplace along with plug-and-play amenities which are at par with grade-A offices. At Awfis, our offering goes beyond desks and our community engagement initiatives and alliances provide a very productive ecosystem," Sumit Lakhani, CMO at Awfis Space Solutions, which has 7,500 seats spread across 21 centres at present. The clientele includes small and medium-sized enterprises, start-ups, freelance professionals, consultants, corporates, etc.
Firms wanting to get more agile are open to housing their innovation teams in such facilities. Some client-centric companies look at making some of their key teams sit close to client sites. Bigger companies and corporates are slowly realising that collaborative work spaces with open areas can boost employee productivity and help attract as well as retain talent.
"An anchor occupier can benefit from co-working spaces provided that the occupier's corporate culture, values and beliefs align with the creative and entrepreneurial community within the space. A large enterprise would be able to leverage a high energy work atmosphere, and the vibrant CoWrks culture that may be synonymous with an already existing culture within a faction of their teams," said Sidharth Menda, CEO, CoWrks.
According to JLL, given the inherent risks in running a co-working space, certain operators are looking at ways to mitigate the risk by preferring to lease out their entire area in a good location, or a big chunk of it, to companies or corporates. Such ‘anchor tenants’ can help them get a fixed income stream even as start-ups and freelancers bring in somewhat unsteady revenues.
In the long-term, however, consolidation among co-working operators will occur, as not all of them will be able to mitigate the risk in their business models or have deep pockets to survive for long in non-prime locations with cheaper rents. Only a handful of big players are expected to eventually remain.