For India's commercial real estate, which is reviving after around four years of downturn, the concept of co-working spaces, popular across many countries, is attracting businesses and is growing in demand.
A co-working space, as the name suggests, refers to an office area where a number of organisations work out of a shared space or floor, contrary to the conventional office area where a particular space is leased out or used by a single organisation. It also provides its members flexibility of space or desks as per its requirement and all the logistical amenities are taken care of by the space provider.
The price per seat in a co-working space varies from as low as Rs 5,000 per month to premium slots going for Rs 35,000 per month, depending upon the operator and the market dynamics.
There are over 600 shared workspaces with over 1.80 lakh seats across the country. Area under co-working spaces is currently around 13.5 million square feet, data from consultancy firm CBRE showed.
In the overall office market space, co-working spaces have seen a rise in demand, especially among start-ups, Anshuman Magazine, Chairman, India and South East Asia, CBRE, told IANS.
"While co-working companies took up a modest 0.17 million square metres (1.8 million square feet) in 2017, the first quarter of 2018 itself has exceeded the annual tally of 2017 at 0.19 million square metres (2 million square feet)," according to a Knight Frank report.
Quoting the CBRE's India Office Market View, Q2 2018 report, Magazine said: "The share of co-working or business center operators doubled from just five per cent in H1 (January-June) 2017 to about 10 per cent in the review period."
In terms of investment in the last financial year, Viral Desai, National Director for Occupier Solutions at Knight Frank India, said: "I would say last year around two million square feet would have been signed up. in terms of investment, it could be around Rs 2,000-3,000 per square feet on setting it out."
According to market participants, space-takers in the segment range from start-ups to big corporations; however, start-ups and small corporations form a major part. Market players say the rise in interest comes on the back of perks such as cost-effective and flexible leasing terms and hassle-free operations, among others.
The major sector players in India are Regus, WeWork, Cowrks, Awfis and Smartworks and, according to the consultancy firm Knight Frank, they have 8.5 million square feet of operational space, with plans for an additional seven million square feet by 2020. Currently, Delhi-NCR, Mumbai and Bengaluru house most of the co-working stock in India, followed by Pune and Kolkata.
Talking of the convenience offered to the consumers, Ryan Bennet, Chief WeWork Officer, WeWork India, said: "It is a segment where you don't have to put down a 10-month security deposit... you don't have to put in any capital investment."
You just have to show up on day one with your computers in hand and everything is taken care of for you," he said. WeWork India is a joint venture of US-based WeWork and the Embassy Group.
Normally, when an organisation signs up for a commercial lease in traditional real estate, it gets locked in for 5 to 10 years, allowing limited flexibility, while co-working spaces give the flexibility to scale up and scale down the space and occupancy duration as the need arises, Bennet added.
He was of the opinion that, on an average, a company would save 15-20 per cent annually while working out of a co-working space compared to the cost incurred in traditional office area.
Along with domestic companies, the demand from foreign firms also is palpable, according to space providers.
Shouvik Mandal, Director of Apeejay Business Centre, said: "Foreign players also face restrictions in buying property... which further attracts them towards co-working spaces."
Apart from IT and other logistical support, many space providers also provide other amenities and facilities ranging from community meetings, food programmes, knowledge sharing sessions and so on, which sets them apart from the conventional office space providers.
Karanpal Singh, founder of The Circle, which recently launched its first co-working centre at the Huda City Centre Metro Station, Gurugram said: "Today the millennials want a good environment to work in, just as much as a good company to work in."
Talking of the designing aspect, Yash Kela, founder of interior designing firm Arrivae, said that corporate offices are more formal and hierarchy-driven spaces while co-working spaces are more vibrant, casual spaces. Community areas like balconies or terraces are the primary areas where employees can interact and discuss.
"Overall, the two categories are the complete opposite. Corporates tend to attract an older age group whereas co-working spaces are catered for start-ups where the age groups are way more younger," he said.
Regarding competition between the conventional office space and co-working facilities, people in the market say that, for conventional spaces, the competition is not of much concern; in fact, both could prove to be complementary to each other.
"These two will basically make up for each other," said Mandal, who also heads the firm, Apeejay Real Estate. Small firms which take up spaces business centres and would move out to a conventional office space in the long run when they grow and the number of employees increases, he added.
The concept of co-working spaces has so far been largely limited to the tier-I cities. Although business centers have cropped up in few tier-II cities, the popularity there is yet to pick up, market players said.
On the outlook for the market, sector players said the market seems positive and demand would increase from here on.
"In India it will expand faster than a lot of other markets, because you have 600 million (people) under the age of 35, a strong GDP growth of over 7 per cent," Bennet said. The Circle's Singh said, "It's only the beginning, and co-working is the largest growing market right now."
(Rituraj Baruah can be contacted at firstname.lastname@example.org)