Leasing by co-working operators is expected to increase by 42 percent in 2021 at 4.9 million sq ft over 2020, with shared offices likely to gain greater significance as organisations reassess space requirements and look for flexibility in the aftermath of the coronavirus outbreak, a report has said.
India had relatively larger co-working formats spanning to about 50,000 sq ft compared to world average of 7,000 sq ft, Collaborative Space in Dynamic World Order report by Savills India has said.
In 2020, as of the third quarter, Bengaluru and Hyderabad had a combined share of around 66 percent of the total leasing activity in the co-working segment. The overall stock, expectedly, has been highly concentrated in the two cities and approximately 51 percent share is expected by 2020-year end, the report says.
“Over the years, shared office space has emerged as a separate asset class bringing significant cost-advantages to occupiers. A wide rate spectrum combined with hassle free operational services on offer, have been instrumental in increasing the affinity of mid-sized firms as well as large corporations towards co-working spaces,”said Arvind Nandan, managing director, Research and Consulting, Savills India.
Co-working in India has grown from a 5 percent share in 2016-17 to about 15 percent in 2019. Though the pandemic related uncertainty in commercial office market has impacted the growth trajectory in 2020, it is still expected to contribute around 10 percent of the overall leasing activity in 2021 and 2022, the report says.
In 2020, co-working players are expected to lease around 3.4 million sq ft accounting for 11 percent share of the office leasing market. Although the overall leasing activity is expected to drop significantly in 2020 as compared to 2019, it is expected to increase steadily over the next two years, the report says.
The share of co-working space take-up in overall office leasing activity is poised to rebound to a 15 percent share in 2021, similar to the 2019 level.
As per the report, over 3,000 co-working centres across the country are likely to offer approximately 1 million desks by 2022. Additionally, leasing activity by the co-working segment is expected to grow by 29 percent during 2015-2022, the report said.
As per the report, the pandemic could possibly lead to an array of trends in the co-working segment including the rise of marketplace platforms with sectoral expertise in flex spaces and increased consolidation with large investor-backed operators weathering the storm successfully. Co-working operators are also expected to tap into residential and retail market offering an integration of retail centers and office spaces.
A survey conducted among occupiers and operators for the report indicated few aspects that are likely to alter the co-working offerings in the near future.
About 60 percent of occupiers believe that work-from-anywhere (WFA) trend is likely to stay in the near to medium term.
Hence, organisations are likely to switch to a hub and spoke model. As per the survey, 61 percent of occupiers seek shorter lock-in period and rent assessment cycles as businesses have become highly dynamic.
As many as 30 percent of the surveyed developers strongly agreed that technology would shape the future of workspace. With 93 percent employees wanting a commute time of less than an hour, developers foresee a high demand concentration in the suburban and peripheral areas of cities.
Apart from rental reassessments with occupiers, 79 percent of the developers recognize that they are expected to meticulously and rigorously analyse force majeure clauses among other aspects.