Co-working’s share of office leasing activity shoots up to 23 percent in FY23: Report

Pune topped with co-working spaces occupying a transaction share of 40 percent in the last fiscal while Bengaluru came next with the net absorption of co-working office spaces increasing to 30 percent.

With regular office leasing declining by 12 percent in FY23 compared to peak year (FY20) when it stood at 43 million square feet (msf) across the top seven cities, co-working has emerged as the biggest gainer. Co-working share of office leasing activity shot up to 23 percent in FY22-23 and demand for flexi office spaces was pegged to grow further by 15-20 percent over the next 2-3 years, according to an analysis by Anarock Research.

In FY23, leasing across the top cities stood at approximately 36.11 msf.

Which cities contributed the most to this trend?

Pune topped with co-working spaces occupying a transaction share of 40 percent in the last fiscal while Bengaluru came next with the net absorption of co-working office spaces increasing to 30 percent. Interestingly, Bengaluru’s co-working spaces and the IT/ITeS industry emerged as overall market leaders, owning 33 percent and 29 percent of the city’s commercial space demand, respectively, it showed.

The trend is not limited to Bengaluru. As more businesses sought alternatives to fixed office expenditures, flexi office spaces in Kolkata also accounted for sizeable transaction shares.

Dominating the office leasing scene in FY23, IT/ITeS occupiers took the lead in the Kolkata office market, capturing a significant 36 percent transaction share. Following closely, co-working spaces secured a 21 percent share of the city’s office leasing activity, highlighting their growing popularity and demand in the West Bengal capital.

Going forward

The co-working sector will have an even bigger impact in the future since the very DNA of work has undergone a fundamental change that will not reverse in the future. The changes in the way India Inc perceives office work post the pandemic are here to stay, said Utkarsh Kawatra, CEO & Co-founder, myHQ (ANAROCK Group).

“Many companies that insisted on their employees returning to office have learned to regret this decision, which itself was born out of an inability to move with the times. In the IT/ITeS space, massive layoffs have been matched by equally weighty attrition levels. In most respects, trying to go back to the accustomed ‘old normal’ has had disastrous consequences,” he said.