COVID-19 has in many ways emerged as the chief designer of office spaces of the future. As the threat of the virus recedes due to acquired immunity, vaccination drive progressing, and further R&D of the drugs to treat COVID-19, many offices are preparing to come back to normalcy, albeit in a new normal – the hybrid model.
And interestingly, in this new work environment, co-working spaces have emerged as the best mode for adopting hybrid model at offices, as per a ANAROCK LinkedIn Survey. As many as 46% survey respondents voted in its favour, followed by 30% who voted for the hub and spoke model and 24% favouring changes in the existing office layouts.
At the start of the pandemic in 2020, it was broadly thought that co-working spaces are likely to perish due to the fear of contagion in shared spaces. On the contrary, the pandemic redefined the need for office spaces. Businesses are now focusing more on cost optimization in case of such an unprecedented crisis in the future. The cost advantage of using a co-working space outshined the risk factor of contagion and gradually, the demand for shared spaces increased.
As per industry estimates, the demand for co-working spaces is already 80-90% of pre-COVID-19 levels. The pandemic has been a catalyst to the growth of this sector, and it is likely to grow manifolds in the next couple of years.
Co-working Revolution
India is at the cusp of a co-working revolution with several large players dominating this space all across the country. Currently, there are close to 3.7 lakh seats in the tier 1 and tier 2 cities across the country and it is estimated to grow at a rate of 15%, compounded annually, for the next five years.
In retrospect, co-working spaces have grown significantly in past 4-5 years. Nearly 35 million sq. ft. of total stock is available across the country presently, out of which 71% is from large players. The rapidly increasing trends of expansion by the major players of shared spaces, and the trends triggered by the pandemic to re-strategize the workspaces indicates a brighter future for this new age asset class.
Various factors that are likely to keep the segment resilient and enable future growth include:
- Current expansion plans of the existing players and entry of new operators in the Indian office space markets
- Commercial office segment to witness renewed growth and reduced vacancies in the post-pandemic era
- Reversal of the densification and consolidation drive that had started in the past decade likely to enable growth of flexi-spaces
- Companies returning to workplaces are likely to leverage flexi spaces to reduce cost and expenditure
Outlook 2022: The Way Forward
As the perceptions of offices change, the workplace now begins to be looked upon as an environment that needs to be optimally managed. There is a need for its evolution as an instrument that could drive a dynamic and vibrant culture of corporate productivity, thereby impacting the financial, cultural, and environmental spirit of the organisation.
This aspirational agenda necessitates an element of specialisation, in which the flexible space operators are filling the niche as a specialist in workplace management to cultivate an environment of collaborative enterprise that yields tangible benefits to the occupier. Going forward, we are likely to see the developers of commercial office assets across the country align with such operators and carve out specialised spaces for them.
The expansion plans of major players and the increasing appetite for this format from occupiers, property owners, and co-working operators would be fuelling the growth. For those companies that are unable to adapt to the changing environment due to constraints in their operating models and the nature of businesses, re-alignment of the office layouts and spaces to accommodate required staff will become imperative.
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