Co-working spaces: Commercial realty's sunrise segment
India Today
The growing number of start-ups has contributed largely to the economy by generating employment, taking services to the last mile, and investing in R&D.
India, one of the youngest countries in the world, is going through an entrepreneurship revolution. The country already has more than 61,400 start-ups as per the Department of Promotion of Industry and Internal Trade (DPIIT). The recent economic survey indicated that the number of new recognized start-ups in India stood at 14,000 in FY 2021-22. This number was only 733 in FY 2016-17.
The growing number of start-ups has contributed largely to the economy by generating employment, taking services to the last mile, and investing in R&D. The commercial real estate in the country has also benefitted from this as there is a direct correlation between the number of corporates and the demand for office spaces and warehousing.
Property rents in India are among some of the highest in the world. Office rent and capex investment for setting up office exert a serious amount of pressure on a company’s financials. This pressure becomes critical for start-ups who are just gaining feet in the market and have capital constraints. Co-working spaces have emerged to the rescue of such companies.
Co-working spaces not only help companies save on costs but also let them save on resources to manage the working spaces. It is estimated that a company can save up to 30 per cent on rent and operational costs while working in shared spaces. Co-working spaces are managed by professional companies and are served as plug-in and play spaces for the tenants. Funds and resource optimization are important for start-ups to grow and sustain their businesses.
Shared offices spaces let the start-ups do this by saving costs and focusing on their core competencies. In these places, employees from different organisations share office space. This offers opportunities for networking, knowledge sharing, generating new ideas, and creativity.
Contrary to popular belief, large corporates and established market players have a much larger share in co-working spaces compared to smaller organisations, start-ups, and freelance professionals. Majority of the centres are located in the Tier 1 cities, however, Tier 2 cities like Ahemdabad, Kochi, Dehradun, Jaipur, Lucknow, etc., are catching up fast.
More than 250 co-working spaces are currently operational in tier 2 and 3 cities. Industry studies have suggested that 80 per cent of clients for topmost co-working centres belong to the large corporate sectors. During the pandemic, new forms of work style evolved. Remote working successfully helped the organisation continue working during the lockdown.One might be inclined to believe that the pandemic was the primary reason for the success of the co-working spaces in India. However, the concept of shared office spaces had already gained popularity much before the pandemic. The rising prices of real estate and demand for flexible working conditions to maintain work-life balance were among the important reasons for this popularity.
