Absorption of flexible offices has doubled in Mumbai with 0.38 million sq ft (2016) to 0.6 million sq ft in the first nine months of 2017: Colliers Research
While the Silicon Valley of India, Bengaluru, leads the flexible office space segment (35%), the financial capital Mumbai is fast catching up and accounts for almost 18 percent of the total number of flexible office locations in India. Also, absorption of flexible offices has doubled since last one year in Mumbai from 0.38 million sq ft in 2016 to 0.6 million sq ft in the first nine months of 2017, says Colliers Research.
In a bid to ensure space efficiency and cost-effectiveness, occupiers in Mumbai are embracing the co-working trend. Affordable and convenient, flexible offices have struck a chord with various types of occupiers. To cater to this increased demand, various local co-working operators have expanded at a rapid pace and received funding from marquee investors. In the first quarter of 2017, one of the largest co-working space provider in India, Awfis raised USD 20 million from Sequoia Capital, which is being considered as one of the biggest fundraising in this segment.
In the third quarter of 2017, co-working spaces accounted for 31 percent of total gross office absorption. The trend is expected to continue in the fourth quarter of 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 the third quarter of 2017. Keeping up with the current trends, co-working share in total absorption is expected to increase by 10 to 15 percent in upcoming quarters, the research says.
Mumbai leasing has predominantly been ruled by the banking, financial services and insurance (BFSI) sector. Although the BFSI companies are still primary occupiers in Mumbai, in recent years, demand from technology, telecom, consulting, logistics, warehousing companies along with co-working operators has intensified. Increasing number of companies are looking for medium sized, efficient and cost-effective solutions. Flexible offices/co-working spaces can act as a solution and occupiers can harness their potential in different ways to mitigate rising rents and shortage of space in popular locations, especially Mumbai.
Going forward, both international and domestic players in the flexible office domain are expected to establish presence in central, suburban and peripheral districts. 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 micro markets, says the research.“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, scalability without liabilities or baggage (expansion and contraction), effective cost savings and gaining efficiency in operations. The facility will provide people with a work environment that they deserve and aspire for, and address critical factors of image, belongingness and community. The offerings also serve individuals, professionals and companies of all sizes, be it startups or an established organization with small or large size of operations”, says Ravi Ahuja, Senior Executive Director, Mumbai & Developer Services, Colliers International India.