Resourceful Coworking Spaces
Work culture today is technology enabled. People can sit in any part of the world and yet work together. Also, the flex-work system has encouraged a growing breed of entrepreneurs, start-ups, consultants and freelancers who are the patrons of Coworking Spaces.
Brad Neuberg is credited with starting the coworking movement in 2005 in San Francisco. His idea was to combine the independence of freelancing with the structure and community of an office space. Since then, a number of coworking spaces have doubled each year in USA. In Europe, U.K. is among the most responsive country to the idea of collaborative working, with a special focus on London. Coworking in Asia is getting popular in major countries like China, India, Singapore, Philippines, Hong Kong and Taiwan due to shortage of space in prime cities and also to foster the rapidly growing start up community in these nations.
“Today workers don’t join co-working spaces just for a physical space, but for the value they can drive through the community existing at the space. Going forward, one who will give customised and good service will survive.”Umeash Sahhaaii
The Age of Growth
The real-estate centric coworking spaces target audience is the freelance professionals, remote workers and small to medium enterprises (SMEs) who need a space and support services like printing, faxing etc. Certain co-working operators lease out parts or the entire areas of their co-working office spaces to the ‘anchor tenant’ corporates. Thus, co-working operators and corporates share a hybrid space and increasingly rely on each other. This solution works for companies who need their client servicing teams close to their respective client sites in locations with low office vacancy. Companies such as GE, Dr Reddy, Accenture, Digital Ocean, ReNew Power and Paypal, alongside industry associations such as FICCI are opting for co-working. Many foreign companies who want to understand the Indian market first, find such spaces in business hubs quite convenient as everything is already setup.For example, The Hive,is a collaborative workspaces platform backed by the Xander Group. With customisable modern office spaces comprising private offices, collaborative workspaces, dedicated concierge services, conference spaces, coupled with access to the swimming pool, fitness centre, spa, bars, restaurants, serviced residences, ample parking and curated event programming, it gives you a perfect mix of work and play. The Hive currently has two flagship centres in its portfolio totalling 150,000 square feet spaces across Bangalore and Chennai.
Some of the factors driving the coworking industry across the globe are:
– On-demand office real-estate: With a lot of companies shifting base or setting up small regional offices, investing in a real-estate or a 10 year lease does not make sense. They need fast & readymade solutions as made available by a coworking space.
– Modern facility management: Large coworking spaces in cities prime locations come equipped with technology and office solutions to provide the infrastructure required by corporate professionals.
– Frequent travellers and freelancers: Professionals who travel frequently or those who work from home, coworking spaces offers a solution to the problem of isolation as well as letting them escape the distractions of home.
– Tech start-ups & creative industries: Coworking is most common amongst digital nomads and those working in creative industries or new media. The want to work independently, but value a collaborative space and the synergy with those in other varied professions.
– Corporates, IT & ITES: To keep their operations’ capital light, co-working spaces come handy to fulfil the requirement of setting operations in multiple cities.
Obviously, quality facilities and infrastructure is mandatory to support coworking structure. Be it a technology-rich environment, excellent internet speed, breakout areas or fully-equipped meeting rooms. The coworking space providers are comprehending the needs of the modern workplace, operating styles of entrepreneurs, start-ups and blue-chip organisations alike and designing their offerings accordingly. According to Amit Ramani, CEO & Founder of Awfis, “The workplace transformation has begun in earnest and will see the biggest changes in the next 5-7 years due to factors like changing lifestyles of individuals, technology progressions, increase in intra – city commute time, and health and well-being taking the centre stage. With the real estate market in India revamping, there will also be a driving demand for office spaces focused on flexible leasing terms.”
Harsh Binani, Co – Founder Smart works believes that the future workspaces would require being a lot more collaborative and community-driven in nature. “The importance of a community environment cannot be undermined. Hence, special importance is accorded to common areas such as gaming zones, learning centres, collaboration labs, state-of-the-art cafeterias and breakout areas within the office premises, where employees can connect and engage with each other. At the same time, the hassle and associated establishment and running costs for these areas have been taken away from the customer.”
“The office workplace today is witnessing a rapid change led by shrinking densities as technology is reducing footprints of the work-desk.”Amit Ramani
The Next Phase
A growing number of coworking spaces are visible in tier-II cities like Indore, Ahmedabad, Rajkot, Udaipur, Jaipur, Kota, Surat and Pune, to name a few. Coworking spaces like LiveSpaces, Project Café, DoubleO, 5B Colab, Working Company,Daftar, Felxi Business Hub, Venture Café, Uncubate, Open Xcell Technology Centre, 1947, Cohere and CIIE’s Ideapad are operational in Ahmedabad. Rajkot has GlocalCoworking Space and Spaceplexx, recently started in Surat.
Jaipur got five coworking spaces Startup Oasis Coworking, Wired Hub, Think Space, Suits Café and Physpace .Recently, Udaipur too got its coworking space The Indian Network. Even Kota, a small city in Rajasthan known for its large number of coaching classes, has its own coworking space in WeCan.
Currently, Indore has around four coworking spaces -Adited, Regus, Co-Work Space and The Hub. While there are about 8 to 10 coworking spaces in Pune such as Designgild, The Mesh, Trios, Co-Works, The Daftar, The Entrepreneurship Facilitation Centre, Venture Centre, Regus and E-Loft and more are opening up shortly.
Elaborating on this shift, Meghna Agarwal, Co-Founder, Indiqube stated, “While metros in India are witnessing an exponential growth in terms of co-working spaces at present, the next cycle of growth in the segment will be generated by tier 2 cities in coming years, owing to overburdened infrastructure coupled with rising number of start-ups in tier 2 regions.There is no doubt that the metros in India are pumping in maximum growth for the sector at present, it would be interesting to see how long the infrastructure will be able to sustain. We earlier predicted a growth of 40-50 percent for co-working space segment in the year 2017 owing to a humongous growth in the number of start-ups and SMBs as well as the rising number of freelance professionals.As per trade association of Indian Information Technology, NASSCOM, India is expected to have as much as 11,500 start-ups in the tech domain alone by the year 2020 of which a significant number is expected to be contributed by tier 2 cities. The ease of commuting, abundance of low priced renting options coupled with the availability of large pools of land and resources will push the industry to target tier 2 regions in near future.Many global corporate giants have set up bases in these regions leading to reverse migration from metros of the tier 2 cities.We are expecting a paradigm shift in the number of start-ups and co-working spaces in tier 2 cities.”
“The concept of co-working space which is gaining rapid popularity in India, particularly in metros will witness its next cycle of unprecedented growth from tier 2 regions in coming years.”Meghna Agarwal
Automation plays a vital role in the co-working space business model. As businesses are evolving and customers getting matured, co-working space providers need to have systems in place for security, access control, customer feedback, invoicing, sales, booking systems, escalation provisions, etc., as the industry matures. Not to mention, technology is essential for smooth communication between customer and business owner, similar to that in the hospitality sector.
Competitive prices are also the key to survival. The per cost seat which a provider can offer to a customer, largely depends on the capital expenses and operational cost. Thus, investing in efficient IT-enabled infrastructure will not only be cost effective for business owners, but will also offer value to the space occupiers.
Providing suitable product mix is crucial. It is imperative to offer the right kind of combination of services and products as per their clients’ needs. Here, a company’s business intelligence and analysis will come in handy, in order to be ready with the correct product mix. For instance, a start-up with a few seats in a coworking space may look for expansion in the same city and other cities as well. If the particular co-working space does not have the option of more seats in the same space or similar set-up in other locations, it may see premature dropouts.
Co-work businesses will also need to be clued in to the changing industry standards and the expectations of the respective workforce.Rise in corporates who are now becoming more open towards co-working spaces need innovation and creativity to build their teams and their company.
The crux to break even for co-working space business owners lies in building a community of like-minded people at the venue through regular networking events. This will create a steady stream of co-workers joining the space that includes start-ups, designers, SMEs, freelancers, bloggers, PR professionals, investors, app developers and consultants. For example, a start-up founder may find an app developer, investor or designer at a space.
The Expanding Horizon
As per industry analysts, 60% of the existing co-working space owners have committed expansion for the new calendar year. Apart from metros like Delhi, Mumbai, Bengaluru and Chennai, cities like Pune, Hyderabad and Gurgaon will also experience growth in the coming years as far as co-working spaces are concerned.Also, the entry of larger players and multinational companies in the coworking segment would only help to usher in better awareness and an era of mature co-working space industry with sophisticated service packages.
By industry estimates, the shared serviced workspaces could spread beyond the scale of what merely is referred to as co-working space. Total leasing volume of co-working spaces in India was 1.2 million square feet in 2016 and is estimated to be around 10 million square feet by 2020.
Briefing on the factors that will fuel the expansion of the sector, Umeash Sahhaaii, Chairman & CEO, Entrepreneur Facilitation Center (EFC)said, “I see a unique business model which will gain popularity. It is — on demand or built-to-suit (BTS) facility, where a major portion of the selected area will be booked by the client before starting operations and the remaining area as per the local market. Cities which will see a growth in demand of the above model of co-working space would be Ahmedabad, Lucknow, Chandigarh, and Panaji & Vasco in Goa.
I would also like to point out that growth in co-working spaces will not affect commercial leasing, rather will benefit it. When small slabs or plates of unused real-estate is converted into co-working spaces, then the probability of occupancy of the same goes very high. Earlier the options were very limited for people who were looking for smaller work spaces, now this on-demand model is coming as a solution for both the parties.
On the other hand, coworking arenas would look at regional offices of established corporate and mid-size IT companies as potential clients, but the regular flow of customers shall be consultants, app developers, finance advisors, trainers and people in similar line of profession.The concept of a co-working space would also serve as an extension to firms who wish to offer friendlier environment to their innovators to increase overall efficiency.”
Majorcoworking operators leased only 1.2 million square feet in 2016, which accounted for 3% of the overall leasing volume, Colliers forecasts that the plan is to lease 8 to 9 million square feet by 2020. We also foresee that the concentration of coworking space will intensify further in Bengaluru, Mumbai, and Gurugram (Gurgaon) due to the availability of adequate infrastructure and opportunities for start-ups in those cities. Hyderabad may also pick up the pace as companies such as Apple, Google and Amazon, have recently taken large office spaces in the city which will create further opportunities for start-ups and a few SMEs. Among Tier II locations, cities that have a high presence of technology companies such as Pune, Jaipur, Chandigarh, Ahmedabad and Kochi should also witness the emergence of coworking hubs.
“As India is still on the verge of witnessing international players’ presence, we expect the industry to see much more experimentation regarding amenities and facilities in such establishments. The changing dynamics will force developers/operators to differentiate their products in terms of amenities, offerings and quality of space. We are likely to see more and more strategic alliances between property owners and operators and emergence of newer models. India offers a great opportunity for coworking space operators to profit from rising demand for flexible, innovative and collaborative workspace designs.”Surabhi Arora, Associate Director Research at Colliers International India.
Colliers believes that the growth of coworking space poses no threat to property developers. On the contrary, they can capitalise on the high demand for functional, flexible working space. Indian developers such as K Raheja, RMZ Corp and Embassy Group are some of the frontrunners, who appreciate the opportunities offered by coworking space. In our view, a strategic alliance between coworking operators, developers and investors will emerge as a new trend in India in the short to medium term. “Coworking spaces are improving collaboration and stress free working environment which helps develop an efficient and a “happy”, workforce. Not just the international operators, now the domestic players, are taking the concept to the next level as well.” VaibhavMahurkar, Director, Office Services at Colliers International India.
In 2016, the information technology (IT) industry represented around 58% of the total office demand in India and 41.6 million square feet of office space was leased in top nine cities. With millennials representing the largest generation in the workforce and unprecedented focus on new workplace designs, work styles, and work culture; these factors have led to growth of flexible and specialised workspaces. The coworking industry is mainly dominated by start-ups followed by media, e-commerce companies and a few corporates and multi-national companies (MNC’s).
Currently coworking operators have a small footprint in India, but they are slowly carving out a significant space in the real estate industry. Although factors such as flexibility, networking opportunity and cost-effectiveness will continue to drive demand of coworking spaces, the need for swing spaces, transitional workspaces and office solutions in multiple locations will further fuel the demand of coworking spaces.