India is rapidly becoming a lucrative business market with friendly policies, keen investors and a large, young and skilled workforce. This young workforce has also been driving a lot of modern workspace trends such as BYOD, Remote Working, digital collaborations and one of the most transformational phenomena – the flexible or coworking spaces. This can be established from the fact that in 2018, the flexible workspace segment was the third biggest gross contributor of Grade A office space in Bengaluru. Other major metros such as Delhi NCR, Mumbai and Pune are closely following suit and witnessing good success in terms of demand and absorption.
Across India, flexible workspace providers leased 2.3mn sq. ft of office space last year, two times its number back in 2017. Apart from Mumbai, Delhi and Bengaluru, Pune in another market that has been gaining a lot of traction for coworking spaces. An industrial and IT hub, Pune has witnessed a rapid growth of startups and tech businesses. Additionally, the city’s proximity to Mumbai and being a comparatively affordable property market, it has become a popular destination for co-working spaces. In H1 2019, the Pune market’s flexible workspace demand was at 7% of the total office spaces. The overall demand and absorption for co-working spaces has increased considerably over the past couple of years, a rise of 40% in the average size of a flexible workspace to 55,000 sq. ft. (4,650 sq. m) in 2019. This also highlights the trend that it is not just bootstrapped companies but large occupiers as well who are taking up large spaces, and in some cases, even entire buildings. eCommerce companies have been one of the major occupiers, and they credit the flexibility of coworking spaces for it. It gives these occupiers the freedom to upscale or downscale their operations as per the requirements of the dynamic sector. Another big occupier is the IT & ITeS sector, which along with eCommerce accounts for 55% of the enterprise demand in India.
Coworking has been making it possible for large corporations to increase their footprint and further expand their reach, without having to invest heavily in buying office spaces. Two of the major co-working service providers, WeWork and The Executive Centre have stated that a large chunk of their member base comprises large occupiers (companies with 1000+ employees), 45% and 70% respectively. This growing demand has influenced developers and workspace providers to be more flexible and offer innovative services in order to lure more large occupiers. It has given rise to ‘Amenitisation’, as service providers are increasingly realizing that it is not just the cost-advantage, but employee satisfaction and good amenities are equally important, if not more. It had also led the developers to accommodate premium and industry-specific designs, become more active participants in the creation of the workspace and focus on international companies entering the Indian markets through mergers and acquisitions.
Although there are a few factors hindering the rapid acceptance of coworking, especially the privacy and data security concerns from BFSI players. Despite industry-specific restraints, the multiple benefits that coworking offers certainly cannot be overlooked. Businesses are exploring innovative options such as retaining their critical departments and moving the non-critical ones to coworking spaces achieving a huge OPEX advantage. With the workforce getting younger across industries, the future certainly beacons the need for more vibrant, youthful and modern workspaces that mirror its employees.