CO-WORKING: Fastest Rowing Real Estate Industry Segment In India

SI Team Nakul has specializaton in hospitality & management from Asia’s finest Hospitality Management school. Prior to joining Avanta, Nakul worked with Regus.

The concept of co-working spaces is not only thriving, but also redefining multiple aspects of the commercial real estate industry. While the co-working market is already trending in almost every developed country, it is fast warming-up in the Indian context and there are many small & big players who are realising the potential of co-working spaces.

How is co-working market shaping-up in India and what are the benefits for companies if they opt for co-working spaces?
The co-working or flexible office space as I like to call it has galloped and outpaced the mainstream industry in terms of both investments, as well as ROI (Return on Investment). It has now been firmly established that there is 20-25 percent cost saving for corporate when they opt for co-working space as compared to blocking their own capital in leasing or buying traditional office spaces. The industry has grown more than 300 percent in the last three years and will further grow by four times by 2020, it will still be a fraction of the total Commercial real-estate in the country.

What are the various formats of flexible offices?
Anything that gives the occupiers flexibility in CRE is a flexible office. Business centres and serviced offices have been popular around the world for a while. They offer plush private offices and discrete common areas. In the recent past, the word co-working has become very popular, a proper co-working space would normally have no private offices and the users from different companies would share a large hall with no privacy. Over a period of time, this
has evolved & open halls have been divided by partition walls and doors to add privacy. Most of the co-working operators don’t offer genuine co-working spaces, but offer flexible offices. In today’s time major distinction is in terms of the decor of the place, quality of the services offered and privacy that the private office offers. This industry is going through a categorisation like in hotels the basic service provided is the same, but the quality of the product and facilities offered distinguish between a five-star hotel and a two-star hotel.

"It’s very interesting times for the industry and the next few years will change the way people work and invest in real estate and the road should smoothen out from here on"

How has the co-working industry grown in India? What is the ideal size of a co-working space?
The concept of Flexible office spaces is a very old in India though it has gained massive acceptance over the last one decade. Due to the massive savings in time & money, it has gradually started marking its presence in Tier-II & Tier-III cities also. On an average co-working offices are 10,000-11,000 sq. ft. in space, with the focus changing to large format facilities in Metro cities this average will increase over the next few years. This concept is now pretty much accepted across the country with big players still concentrating mostly around big cities, but numerous others that are going to the hinterlands.

As regards to styles & segments of co-working real estate market, there are various formats and many new players are still experimenting with the right offering. There are domestic players also, but it is the international ones that are offering formats that have been tried and tested in international markets over the years, it is pertinent to remember that the international formats will have to be modified to fit the Indian scenario. Regardless of the origin, the co-working real estate players have been able to offer a win-win proposition to the stakeholders; that is, the occupants and the investors. Needless to say, the occupants enjoy myriad benefits of working together like sharing and discussing new ideas with the occupants of the adjoining desks and sometimes getting all the associated services like chartered accountancy services, digital marketing and others under the same roof. As the number of players increase, Flexible workplace operators will need to seek ways to be unique and differentiate themselves from competitors.

What is the growth rate that the co-working real estate industry is witnessing? Why is the industry experiencing this growth?
The Flexible office market in the country has shown signs of maturity, growing at 300 percent in the last three years and will grow four times by 2020. According to a report, this segment is expected to receive investments of $400 million, there are about 300 flexible space operators operating around 730+ facilities. The industry has been effectively catering to small and new businesses. There are many midsize companies that have now realised the benefits of cost saving.