Co-working Gathers Pace in Delhi NCR; May Become Major CRE Disruptor
With a thriving start-up ecosystem aided by the Modi Government’s efforts to create an enabling environment for entrepreneurs across the country, demand for co-working spaces has been rising in recent times. Among the main drivers of this phenomenon are the increasing number of freelance professionals and consultants in today’s globalised workforce, for whom co-working spaces are now all the rage across Indian metros. Also, co-working business centres are in great demand with corporates looking for flexibility in work locations.
Delhi NCR is definitely among the more prominent regions witnessing this global trend. In 2016, the number of co-working spaces in Delhi NCR was more than 30; this year, it is expected to go over 40. There are currently more than 2,500 seats available across different micro-markets in NCR. The average occupancy share of co-working office spaces across NCR is about 70-75%, but will go up once the recent seat additions in most micro-markets are leased out. Of all micro-markets, CBD Delhi has the lowest vacancy in this segment at 8-10%. All other micro-markets have vacancy levels in a range from 20-35%.
The number of co-working seats is expected to range between:
- 200 and 250 in Delhi CBD (central business district)
- 450-500 in Delhi SBD (secondary business district)
- 250-300 in Gurgaon CBD
- 500-550 in Gurgaon SBD, and
- 400-450 in Noida’s CBD and SBD together.
The cost per seat per month is in the range of:
- INR 10,000-15,000 in CBD Delhi
- INR 8,000-15,000 in SBD Delhi
- INR 13,000-15,000 in CBD Gurgaon
- INR 7,500-12,000 in SBD Gurgaon, and
- INR 7000-10,000 in both CBD and SBD-Noida.
What Makes Co-working Tick?
Co-working spaces are rapidly popping up across Indian metros and tier-II cities. Through these, start-ups get flexible working options at affordable rents. These spaces offer desks at cheaper rentals in an office-like environment. Business nomads, expats or those travelling to the country for a few months also prefer such options instead of working out of coffee shops. For co-working operators, small and medium enterprises, along with start-ups, are the biggest target clientele.
The number of players specializing in co-working office spaces across India is expected to surpass 100 sooner rather than later. Some of the major co-working spaces in Delhi NCR are run by firms like 91 Springboard, Awfis, Investopad, Innov8 and Alt F, among others. The biggest benefit these spaces offer to their clients is a cohesive and synergised environment along with business networking opportunities. Moreover, co-working players organize many corporate events for their clients to socialise formally.
Apart from freelancers and consultants, some corporates offer flexible working options to their staff by leasing a few desks in some of these establishments. To reduce their financial burden and simultaneously motivate and retain talent, more corporates could turn towards co-working spaces in the future. Some companies also decide to base their project teams out of co-working places to let them remain close to their clients.
Developers, too, are now starting their own co-working offices to provide incubation spaces, or divide large floor plates for smaller occupants. There is currently very limited supply of co-working spaces – but once this situation improves, the demand for them will skyrocket. As bigger co-working players enter India and more such facilities crop up across cities, this category can prove to be a major disruptor on India’s commercial real estate market.