The Future Of Work In 2021
THE YEAR 2020 HAS INTRODUCED SOME IRREVERSIBLE CHANGES TO COMMERCIAL REAL ESTATE ACROSS THE GLOBE. ORGANIZATIONS ARE REASSESSING THEIR OVERALL OFFICE SPACE REQUIREMENTS AND ARE INCLINING TOWARDS WORKPLACE FLEXIBILITY.
Co-working in India has grown from mere 5 per cent share in 2016-17 to about 15 per cent in 2019 and despite the year 2020 being marred by pandemic, it is still expected to contribute around 10 per cent of the overall leasing activity in 2021 and 2022.
According to a report on co-working spaces by Savills India, the total leasing by co-working operators in India is expected to increase by 42 per cent in 2021 at 4.9 million sq ft over 2020 with shared offices likely to gain greater significance.
AN ARRAY OF TRENDS
While, Work from Home (WFH) has liberated people from traditional concept of working from office. Companies as well as employees have realized that WFH can’t outweigh the benefits of working in a physical office space. Not surprisingly, many companies are moving to co-working spaces or managed offices due to flexibility and pricing. A recent report projects 50 million square feet co-working space market by 2023.
India has relatively larger coworking formats spanning about 50,000 sft compared to world average of 7,000 sq ft
- Demand is rising among enterprises for low-risk, scalable flex workspace. Share of solopreneurs, entrepreneurs, and freelancers has risen considerably in co-working spaces.
- With corporates turning to coworking, landlords are seeing new investment opportunities. –capitalizing on vacant space to meet new demand.
- Expansion in Grade A vacancies and predominantly residential markets will continue and demand will fortify in Tier II and Tier III cities, as residential coworking locations become increasingly sought after.
- Occupancy rates will stabilize and gradually increase resulting in greater resiliency in the future as demand gradually increases among remote teams.
- Operators will prioritize wellness offerings to meet the demand among professionals for safe, health-first work environments.
- Open-style office layouts will be replaced by design elements such partitioned workspaces and enclosed offices in accordance with new safety regulations.
- More hospitality brands will look to coworking for new partnerships and hotel-based workspaces.
The pandemic could also lead to the rise of marketplace platforms for flex spaces and increased consolidation with large investor-backed operators. Co-working operators are also expected to tap into residential and retail market offering an integration of retail centers and office spaces.
For the flexi space operators, adherence to social distancing norms would mean lesser dense office planning across all work zones, cafeterias, lobbies and cabins which would translate modifying of existing spaces and higher spends per seat. It is also imperative that the operators understand the changing needs of the customers, innovate and come up with new solutions to cater to the evolving work landscape. Another important change already taking place is the conventional lease model being replaced by revenue-sharing model.
Vishwas Mudagal, CEO & Co-Founder – GoodWorks Coworking Spaces and MD & Co-Founder – GoodWorkLabs Technologies shares his views.
How do you see the coworking segment performing in 2021?
Coworking will see a bounce back in 2021 and 2022. Customers are no longer looking to invest in long-term lock-ins, capital expenditure in interiors, giving bigger security deposits and have started to rely on coworking and managed office providers to make these investments and outsource office operations. With coworking players operating in Grade A and B+ buildings, infrastructure and technology have significantly improved. This would mean that more companies would move into flex spaces. There will be significant VC and PE investments, which will propel the industry forward. However, penetration of coworking players into smaller cities and towns has been slowed down by the covid pandemic.
“YES, PHYSICAL OFFICES ARE HERE TO STAY, BUT THE FORMATS ARE GOING TO BE SMALLER – IT WILL BE CALLED NETWORK OF OFFICES.” VISHWAS MUDAGAL, CEO & CO-FOUNDER – GOODWORKS COWORKING SPACES
What will be the occupiers leasing trends?
The ‘work from home’ or ‘work from anywhere’ model is likely to stay and business uncertainty will continue for a few years. So the occupiers will look for short-term lock-in periods, smaller offices and shorter rent cycles. Instead of taking up large spaces for 1000+ employees, customers will now look at multiple smaller office spaces in multiple locations in the same city and across cities.
What are Goodworks’ future strategies?
We aim to be at 1 million sqft of Grade A space in Bangalore alone, with 20,000+ seats. We already have top of the line customers such as BMW, Tesco, CSS, South Indian Bank, Cure Fit, and the like, and further we want to cater to SMEs and startups in all the micro-markets in the city, including Whitefield, Electronic City, Koramangala, ORR, North Bangalore, Indiranagar, MG Road, etc. as also other metros and tier-2 cities where there is enough latent potential in the near future.