Office-space absorption may be at a six-year low thanks to the COVID-19 second wave, but that doom and gloom hasn’t quite had an impact on the co-working space ecosystem.
Chennai-based co-working space aggregator WorkEZ recently launched 1.3 lakh square feet of shared work spaces comprising 3,500 work stations. While the launch puts the brand in pole position in the Chennai co-working market, what has drawn appreciation from all quarters is the manner in which WorkEZ launched each of its existing co-working space centres after the pandemic.
Today, the company has 8,500 seats spread across 4 lakh square feet, notching up an impressive 93 percent in occupancy. WorkEZ insists that COVID-19, and the new normal that followed, helped the business grow.
"We have seen an upside because of the pandemic — because we are seeing a lot of enterprise clients letting go of their traditional spaces," says Prathap Murali, business head, WorkEZ, "These clients are exploring managed office spaces as their first option because it falls between work-from-home and the traditional office."
It’s true: companies are choosing co-working spaces today, as an alternative to working from home especially for employees entrusted with conducting pitches, presentations and networking. Another advantage of renting out such spaces is that they also provide some degree of distancing while at work.
However, the real attraction is that shared work spaces come scattered across multiple locations, thus working well for firms whose employees have settled into the routine of remote working. "A large corporation once wanted 2.5 million square feet of office in the heart of Bengaluru," recalls Anuj Puri, chairman and founder, Anarock, as he tries to explain the co-working space boom, post-pandemic.
"This company now says 'we don’t want that, we want 15 lakh square feet as centralised head-office space, and the remainder of our 10 lakh square feet we’d like as 1 lakh square feet in 10 different locations close to our employees’ homes," Puri says.
Geographically, the trend of renting shared workspaces is more prominent in South India, with a Savills India report indicating that Bengaluru and Hyderabad command more than half the commercial deals struck recently.
The report adds that co-working space leasing activity could increase by 42 percent YoY in 2021, with flexible offices accounting for 15 percent of all pan-India office spaces by the end of the year. At a compounded annual growth rate (CAGR) of 29 percent since 2015, shared workspaces in India, the study reveals, could cross 3,000 co-working centres with a million work stations, by 2022.
These projections are in line with developments on the ground. Despite the pandemic, several operators have begun leasing new buildings and servicing brand-new office spaces.
These operators now say they hope to expand to more South Indian cities, hoping to tap new markets and rent seats at competitive prices in cities like Vishakapatnam, Vijayawada, Mysore, Coimbatore, Madurai and Kochi. They’re also bullish about future business.
"A mid-sized IT company would take about 50 to 100 seats,” says Gurbinder Rattha, founder and MD of Chennai-based shared workspace operator, Workafella, "Even if we were to accommodate 20 of these companies, we’ll be at 90 percent occupancy."
Also read: View: Housing affordability is at its peak; Indian realty now want buyer sentiment to stay positive
If these projections pan out in the real world, there’s little doubt that the co-working space market could be on the verge of a strong growth spurt.