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Demand for co-working spaces continues to increase

Bengaluru and Mumbai account for over 50% of flexi-spaces in India

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The concept of co-working space is becoming increasingly popular with just two cities of Bengaluru and Mumbai accounting for over 50% of co-working spaces in India.

Bengaluru has maximum co-working office spaces in India with a 35% share of the segment while Mumbai accounts for 18% of flexible offices in India.

Absorption of such offices in Mumbai has doubled since the last one year to 0.6 million sq ft in the first nine months of 2017 from 0.38 million sq ft in 2016, said Colliers International India report. Flexi-space has been a disruptor and has already carved out a segment for itself.

In fact, even in the overall office market in Bengaluru, co-working spaces have witnessed an increase in demand, as per another report by Knight Frank.

In order to cater to this increased demand, various local co-working operators have expanded at a rapid pace and received funding from marquee investors.

In Q1 2017, one of the largest co-working space provider in India, Awfis raised $20 million from Sequoia Capital, which is being considered as one of the biggest fundraising in this segment.

Recently, co-working players such as iKeva and Avanta also announced expansion plans.

There are about 300 co-working providers in India operating less than 1,000 centres in urban India - of which less than 100 are branded spaces.

"The occupancy levels for co-working spaces run by a handful of branded operators in India have been touching 100%. In addition, they have been notably breaking even within five months of launching new spaces," said Ramesh Nair, chief executive officer and country head of JLL India.

A research by real estate services firm JLL India predicts that by 2025, 42% of India's population will be living and working in its urban centres. With this growth in the urban population, there will be a far greater demand for shared workspaces in less than a decade.

Ravi Ahuja, senior executive director, Mumbai and developer services, Colliers International India, said that "the offerings of co-working space meet the gaps in the expectations for corporates to address flexibility, scalability without liabilities or baggage, effective cost savings and gaining efficiency in operations. The offerings also serve individuals, professionals and companies of all sizes, be it start-ups or an established organisation, with a small or large size of operations."

Even Meghna Agarwal, co-founder of IndiQube, a techno-flexi workspace provider, said, "The recent paradigm shift in the workspace industry in India has become a potential market for start-ups and professionals who are looking for flexible workspaces. It is estimated to witness around 8 to 9 million sq ft of commercial workspace being leased out by 2020, enough to indicate the potential of this promising sector. We have something for everyone in the office space segment, be it a freelancer who could do well with a single workstation, a start-up which would require more scalability in its office space requirements or an established business seeking a workspace for its large pool of employees,"

If the momentum continues, co-working space in India may grow further. The segment is expected to receive $400 million in investments by 2018 and is set to grow by 40-50% to reach over 1 million sq. ft. of leased 'alternative' workspaces by the end of the year in India, added JLL's Nair.

WORKING TOGETHER

  • The segment may receive $400 mn in investments by 2018
     
  • There are about 300 providers operating less than 1,000 centres in urban India  
     
  • Recently, players like iKeva, Avanta announced expansion plans
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