Co-working spaces are fast becoming popular in the country and their share in overall commercial leasing activity, is rising sharply. About seven million sq ft of co-working spaces have been leased in 2018 so far, out of the 43 million sq ft of total commercial area leased. This is in sharp contrast with 2017 data, when only about 1.7 million sq ft of co-working area was taken up, out of a total of 41 million sq ft of commercial realty in the country.
Co-working spaces provide cost efficiencies for the occupants, apart from benefitting from collaborations with each other. There is also plenty of flexibility that the co-working spaces offer to the occupants.
Metro cities dominate co-working spaces
Bengaluru accounted for most of the co-working space leasing in the country. The National Capital Region (NCR) and Mumbai took second and third positions, respectively, in co-working space leasing. These three cities together account for about 70 per cent of all the co-working spaces currently. Hyderabad, Chennai, Pune and Kolkata are also taking up a fair share of the shared spaces leasing activity.
There are close to 450 co-working space operators, spread across 800-900 locations in the metros and tier-2 cities. Regus, WeWork, CoWrks, Awfis and Avanta are some of the biggest co-working space operators in the country. However, the industry is highly unorganised with the presence of many small players. The charges per seat in these shared workplaces range from Rs 3,000 to Rs 40,000, depending on the location, operator, facilities and other market determinants.
While some of the seats in shared working places are taken up by freelancers, others are taken up by enterprises. Even large companies are realising the benefit of shared spaces and are increasingly opting for it. Some large corporates are booking shared offices, for reasons like placing the employees close to the physical presence of their clients, while others are opting for co-working places for the savings in cost that these places have to offer.
Presence of foreign co-working operators
The co-working office space market in India, is growing at a much higher pace than in any other country. According to experts, the co-working office space segment in India is growing at 40 per cent, as compared to 25 per cent in the United States. That is one reason why foreign operators are increasingly entering the Indian market, bringing their global experience with them. These foreign operators are mostly joining hands with Indian partners, to enter India.
For example, New York-based WeWork tied up with Embassy Group of Bengaluru to enter the country. It pays a management fee to the Indian partner.
While the organised players are mostly operationalising Grade A spaces for co-working, smaller players are spreading far and wide and taking up sub-Grade A office locations also.
Private equity firms are also betting big on the co-working space scenario in India. Sequoia Capital has invested in Delhi-based operator Awfis for its expansion, while Xander Group Inc is also steadily building its co-working space portfolio in India.