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Absorption of flexible offices has almost doubled in Mumbai from 0.38 million sq ft in 2016 to 0.6 million sq ft in the first nine months of 2017. By 2018, more transactions are expected to conclude in this segment, according to a report by Colliers International India.
It notes that the Silicon Valley of India, Bengaluru is leading with maximum number of flexible spaces (35 per cent), while the financial capital Mumbai is also catching up and accounts for almost 18 per cent of the total number of flexible office locations in India.
Growing demand
“The flexible/co-working space has proven to be a disruptor and an asset class in itself with offerings that meet the gaps in the expectations for corporates to address flexibility and scalability without liabilities or baggage (expansion and contraction), effective cost-savings and gaining efficiency in operations, said Ravi Ahuja, Senior Executive Director, Mumbai & Developer Services, Colliers International India.
To cater to the growing 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 one of the biggest fund raising in this segment.
Rapid growth
In Q3 2017, co-working space accounted for 31 per cent in total gross office absorption. Collies expect this trend to continue in Q4 2017 as co-working players such as iKeva and Avanta have recently announced expansion plans.
In addition, Innov8, a leading co-working player, launched a co-working facility of 10,000 sq ft in Andheri East in Q3 2017. Keeping up with the current trends, we expect co-working share in total absorption to increase by 10-15 per cent in upcoming quarters.
Currently, flexible offices have a strong presence in most major commercial districts of Mumbai namely BKC, Andheri, Powai, Vikhroli, Lower Parel and Navi Mumbai. The footprint has increased tremendously in the last one year and we expect flexible offices to make their mark across all major Mumbai micromarkets.
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