Co-working spaces in India are set to expand capacity in the next 12-24 months due to a surge in demand from startups, global capability centres (GCCs), and IT/ITeS companies, driven by the need for flexibility and cost optimization.
According to a recent report by private equity advisory firm Avendus, India’s flexible workspace market is projected to reach 126 million sq. ft. by 2028, up from 61 million sq. ft. in 2023. Around 250 flex workspace operators, with $3.5 billion in annual revenue in 2023, are estimated to clock revenues of $9 billion in five years.
For instance, co-working firm 315Work Avenue plans to expand its portfolio to 4 million sq. ft. in the next 18 months, up from 2 million sq. ft. currently. The company, which has a seating capacity of 40,000 seats across the country, plans to expand its geographical footprint to New Delhi-NCR and Hyderabad.
“Major factors that come into play when companies look for office spaces is the availability of location and this is where the co-working space providers step in. Additionally, companies face the challenges of building and creating an office space wherein we get it custom-ready for them. Co-working spaces also help in the financial end as most of the capex is borne by us. Hence, this helps companies to pull in the money to business. Moreover, we help companies stay focused on the core operations rather than handling non-core ones. Another factor is the diverse community mix as there is not just one company and its employees, but others as well,” said Manas Mehrotra, founder, 315Work Avenue.
Urban Vault has earmarked an investment of Rs 40-50 crore in FY 24-25 with plans to augment its existing 2 million sq. ft. portfolio by 1 million sq. ft. over the next two years. It also plans to expand its footprint in Hyderabad and Pune by FY25, alongside a strategic evaluation of the Delhi-NCR market and reinforcement of its Bengaluru presence.
“One driving force is India’s growing macroeconomic level where GCCs are being set up in the country that percolates to flexible offices. Another factor that has played a pivotal role post-Covid has been the flexibility that employers want to provide their employees and this can only be met by flexible offices. Post-pandemic, most companies are moving to flex office spaces due to the hybrid work situation, reflecting a shift away from traditional fixed assets,” said Amal Mishra, co-founder of Urban Vault.
WeWork plans to inaugurate its first building in Chennai in early June. Currently, the company is spread out across 54 locations with more than 90,000 desks across seven cities.
The integration of technology plays a key role in meeting the growing needs of businesses, said Karan Virwani, CEO, WeWork India. “Earlier this year, we launched WeWork Workplace, a comprehensive space management tool, which helps manage their workforce as opposed to just managing the workplace, enhancing their overall hybrid experience. It facilitates organizations to leverage data-driven insights to optimize their real estate needs while saving costs,” he said.
With a current portfolio size of 10 million sq. ft., Smartworks aims to expand its platform to 30 million sq. ft. and 50,000 seats within the next four years.
“Post Covid, this segment has risen like a phoenix. Earlier, it would take companies a lot of time and effort to build their own offices and manage their daily operations. Now, in a flex office model, one does not have to spend bulk money upfront as there’s a rental payment which is amortized, and time is also saved,” Harsh Binani, co-founder of Smartworks.
New York City-based Upflex’s domestic arm attributes the growing demand for flexible spaces among corporates to factors like budget balance, availability of commercial real estate at a lower price, and ease of operations as key drivers.
“This trend is not only in India but a global phenomenon, and today, businesses have become dynamic. The biggest challenge the corporates face is the management of their balance sheet with less expense to their cost. Precisely, this is why managed workspaces and co-working have become one of the most popular options. Companies do not need to invest capital yet corporates get flexibility,” said Pratyush Pandey, CEO, Upflex India.
Hong Kong-based The Executive Centre (TEC) has flexible workspace presence in India across Gurugram, New Delhi, Mumbai, Pune, Bengaluru, Chennai, and Hyderabad and plans to expand in these regions. “Large corporations across industries are embracing flexible workspace strategies to diversify their real estate portfolios. Sectors such as IT/ITES, pharmaceuticals, BFSI, SaaS, and fintech are among the frontrunners,” said Nidhi Marwah, Group Managing Director, South Asia and Middle East, TEC.
First Published: Mar 25 2024 | 5:16 PM IST