Sharp rise in share of co-working space in total office leasing

The co-working segment in India has seen impressive growth in recent years and is now a catalyst of sorts for modern workspaces. The share of co-working space in total office leasing has zoomed to 14 per cent in 2019, from 8 per cent in 2018, said Ramesh Nair CEO and Country Head, JLL India.

“This proves the growing popularity of co-working spaces, as seen from a spike in the share of co-working in total office leasing. Growth has been witnessed in the number of operators as well as the flexible space take-up in the top seven cities in India,” he added.

Impact on employee productivity

Apart from SMEs and start-ups who look for cost-effective and flexible options, co-working spaces have been gaining traction among large corporates too, due to the positive impact of such workspaces on employee productivity.

A survey by JLL showed that 40-45 per cent of co-working demand emanated from big corporates, followed by SMEs (35-40 per cent) and start-ups (15-25 per cent).

Nair said the acceptance is slow but gradual, and it is interesting to note that the global sentiment with regard to co-working has had a limited impact on the growth of the segment in India so far. “Co-working business models in India are evolving considering the altering requirements of prospective occupiers. Operators are shifting their focus by offering more closed office spaces and fixed seats, as opposed to hot desks, to cater to corporates’ need for privacy and business performance. The trend is gaining popularity as the majority of the demand from occupiers is for cabins or closed spaces that have dedicated areas exclusively for the companies who have taken the space from the operator,” he added.

A new kind of expansion is already underway, said Nair. “Co-working operators are not limiting themselves to office complexes but expanding their horizons beyond and venturing into shopping malls, hotels and metro stations as well. The huge potential of this sector is attracting institutional investment and this in turn is furthering growth. Investments and acquisitions are not just driving geographical expansion, but also aiding technological augmentation, upgradation of amenities and an increase in the client base.”

‘Branded’ tenants

Landlords and developers have also realised the potential of co-working spaces, as reputed brands working out of such spaces also add to the value proposition of the building. “Companies are now choosing to opt for co-working spaces as they are having more flexible lease terms, contemporary ecosystem, lower deposit requirements, absence of capital expenditure and help in overall cost reduction in case of the company's cash flow,” said Nair.