Co-working space leasing in India to touch 10 million sq.ft
With the concept of shared office space fast catching up in India, leasing is expected to touch 10 mn sq ft by 2020. While demand more than tripled in 2016 to touch 0.7 mn sq ft as compared to 2014, this year leasing is expected to cross 1.5 mn sq ft, says a report titled The Art of Co-working by CBRE South Asia Pvt Ltd.
Shared office spaces fall into three categories – traditional business centres, co-working spaces and incubators/accelerators. According to CBRE Research, currently, there are close to 350 shared office operators present in India, spread across 800 locations in Tier 1 and Tier 2 cities.
As many as 85 percent shared office space in India is in Tier 1 cities, while the remaining 15 percent is in Tier 2 cities. With Bengaluru, NCR (Delhi, Gurgaon and Noida) and Mumbai being gateway cities, 75 percent of the shared office spaces are based in these three locations. Each has more than 100 shared office spaces followed by Hyderabad, Chennai and Pune. CBRE research also revealed that while more than 90 percent of business centres and co-working spaces are present in tier 1 cities, almost half of incubators/accelerators are present in tier 2 locations.
The most significant benefit of a co-working space is the cost saving as compared to a conventional space leasing. In the larger cities of Delhi, Gurgaon, Bengaluru, Mumbai and Pune, for instance, cost saving is anywhere between 10 percent to 25 percent when choosing a co-working space over a traditional office space.
“India’s office market has seen sustained growth in the past few years. It is also one of the most dynamic segments of real estate, witnessing numerous advancements, whether it is technology driven, design related or with regards to workplace strategies. With the global economy continuing to expand and India emerging as a hotspot for corporates expansion strategies, it is only natural that concepts such as shared offices/co-working spaces would pick up the pace. Occupier focus on business operations over RE decisions, increasing occupier awareness of co-working as an alternate option, the rising acceptance of ‘remote’ working and an increased preference towards flexible leasing terms will be factors that will drive demand for co-working spaces in the times to come, said Anshuman Magazine, Chairman, India & South East Asia, CBRE.
Initially, co-working spaces were focused on providing solutions for entrepreneurs and startups who had constrained budgets for their office setups. However, with the benefits that such spaces offer – affordability, negligible CapEx requirements, efficient space usage and flexibility to expand and contract at short notice, the concept is now catching up with established corporates.
Commenting on the findings of the report, Ram Chandnani, Managing Director, Advisory & Transaction Services, CBRE South Asia Pvt. Ltd. said, “With domestic and international corporates focusing their expansion strategies on cost efficiencies, optimum business operations and space utilization, co-working is not only changing the dynamics of office spaces in India, it is also defining the corporate culture of the future.”
Co-working spaces have been dominant in the top cities of Gurgaon, Delhi, Bangalore and Mumbai, with smaller cities of Pune, Chennai, Hyderabad and Kolkata have seen a higher presence of business centres – a result of business centre formats entering the Indian market at an earlier stage. Tier 2 cities such as Kochi, Ahmedabad, Chandigarh, Bhubaneshwar, Patna etc. are witnessing demand for incubators/accelerators formats. 90 percent of shared office operations in India are by domestic players who offer all three formats, whereas international operators focus on business centre spaces followed by co-working operators. There are more than 20 international operators in the shared office segment in India, mainly from APAC, USA, UK and EMEA.