Co-working spaces have changed the work environment today; massive growth has been seen in the last decade across the world. Today, the demand for co-working space has gain momentum across India so much that about 13 million people are expected to work out of co-working spaces by 2020 as per a JLL India report.
The spurt of start-ups and steady economic development are the drivers of growth for this flexible workspace industry. In fact, India is the second-largest market for co-working space in Asia- Pacific, second only to China. As per CBRE research co-working space in Asia-Pacific has injected about US$3 billion in the past few years. Post RERA and GST regulations, the sluggish growth of Indian real estate and picked up the pace with the star strike of co-working spaces in across all industry verticals.
Why Co-Working Spaces are hot deals in the Indian Real Estate?
Today, co-working options are modern workspaces with latest amenities such as Wi-Fi, conference rooms, snack bar, game zone, phone booth, Zen area, meditation, and yoga, etc. The perfect amalgamation of modern facilities and creative ideologies is becoming a preferred choice for businesses of all sizes. Not just IT infra, world-class office arrangements, and all work essentials, but innovative concepts to enhance productivity and boost growth are also offered by new age co-working spaces.
Whether it Zen philosophy based environ or a vibrant aura to energize the workers, co-working spaces are rising as a package deal for modern businesses. For the fact, being surrounded by Zen Buddhist aesthetics allows people to work at their creative best and makes them as much productive as they can possibly be. Such brilliant workplace concepts and best-in-class facilities help business to involve in their core functioning and excel in their verticals.
The growing trend of co-working space has reached a footprint of 40 million sqft. as of H1 2018 in 16 major Asia-Pacific cities including Bangalore, Mumbai, and Delhi NCR, as shared by CBRE. Start-ups have been early adopters of co-working spaces, but now even corporate are tapping into its potential as well. The reasons for corporate to go beyond the traditional system are cost savings and hassle-free readymade office solutions. They have realized that the co-working office set up can lead to innovation, boost in productivity and employee satisfaction if they are going to work with young, energetic and like-minded people outside.
Numerous businesses have begun making the switch to co-working spaces not only because of pricing, but flexibility to grow within the same physical space, without having to move from one location to another as and when they scale in a number of members. It is one of the most cost-effective solutions for any business. Neither does business has to execute an additional lease, nor does it has to invest in new infrastructure, all it has to do is add a few more seats to their membership. Down-sizing the team also works in a similar manner without having to pay a fixed rent as per conventional commercial real estate leasing models.
Co-working is proving to be one of the most ideal workspace solutions for all kinds of businesses ranging from freelances to larger corporations. With the multitude of services and community-driven ecosystem at affordable pricing and such flexibility, co-working spaces have given the service industry a whole new approach.
Influence of Co-Working on Commercial Real Estate
The flexibility that co-working gives equates to great potential for the commercial real estate industry. Also, the co-working centers already having IT infrastructure as well as in-office amenities are focusing more on developing their products and services. Co-working market players are opting for a longer lease, which provides steady, long-term revenue, predictable positive returns, and better ability to withstand future economic growth. The recession of 2008 due to which many companies had to face downsize is partially responsible for the growth of co-working space, which allowed entrepreneurs and freelancers to mark a new beginning and speed up the economic growth of India.
The property owners, builders, and realtors are also following the increasing demand and investing in incorporating co-working space models. Although, leasing vacant space to an office firm is a great way to increase income yet the concept of co-working space can yield two to three times more revenue per square foot than a traditional space. This has given the required boost to the commercial real estate sector. As the trend of co-working is growing day by day it will remain a force for years to come. This is time for commercial real estate to consider them as beneficial amenities in their buildings. In true sense, co-working spaces are becoming a new backbone of the Indian real estate.
By: Gautam Duggal, Co-founder & CEO of Eccosphere