In recent years, India has witnessed a remarkable rise in the popularity and prevalence of co-working spaces. These shared work environments have emerged as a dynamic solution for the evolving needs of professionals, startups, freelancers, and remote workers.
- In India, co-working spaces are gaining in popularity, as they provide a flexible and cost-effective option for entrepreneurs.
- A large number of corporates, MNCs, mid-sized enterprises, banks, professional consulting companies, Freelancers, solopreneurs, start-ups etc. are preferring shared-office spaces over traditional office spaces.
- With growing demand, the co-working spaces industry is evolving and expanding fast.
- From the major cities, the industry is progressively stretching towards Tier 2 cities and towns in the country.
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Co-working spaces have been flourishing in the country for over a decade. The first co-working space in India was founded by 91Springboard in 2012. This trend is driven by several factors, including the thriving startup culture, the rise of freelancing and remote work, cost-effectiveness, networking opportunities, modern amenities, scalability, and the supportive services provided within these spaces.
As the demand for flexible workspaces continues to grow, co-working spaces in India are redefining the way people work and collaborate, empowering individuals and businesses to thrive in a dynamic and interconnected world.
The Covid-19 pandemic period saw a rapid rise in work-from-home and/or remote working models, which further led to the growth of flexible workspaces. The pandemic lockdowns in 2020 and early 2021 caused a dip in demand for flexible office spaces. However, after the second wave, especially from July 2021 onwards, demand for retrieval has been extremely strong.
There are over 300 co-working spaces in India. Some of the leading co-working spaces in the country include 91SpringBoard, Innov8, Awfis, The Executive Centre, PlusOffices, Smartworks, Social Offline, GoodWorks CoWork, Chitkara Innovation Incubator, RentADesk, iKeva, among others.
The Co-working Space and It’s Expanding Market
Co-working spaces are an arrangement where many workers from different companies share an office space. They offer location flexibility, simplified contractual arrangements and an easy entry-exit alternative. In addition, they offer numerous shared facilities such as gyms & fitness centres, common areas, cafeterias, cafes, libraries, etc. (primarily open 24 hours). Employees can thus log in at their convenience to do their work.
Various companies and businesses including start-ups and many IT/ITeS companies are increasingly opting for co-working and managed spaces. In fact, a large demand for leasing is coming from big corporates, MNCs, mid-sized enterprises, banks, professional consulting companies, freelancers, solopreneurs etc.
Before the Covid pandemic, in 2019 the flexible office spaces market stood at 30 million sq. ft, with 471,782 seats, spread across the top seven markets (cities) in India. According to the JLL Research data, the co-working market size contracted to 20 million sq. ft and 312,990 seats towards the end of 2020. However, the recovery process thereafter has been quite significant.
By June 2022, co-working spaces across the top seven cities had recorded a growth of 117%. They covered around 43.4 million sq. ft, with over 679,760 seats. Towards the end of 2022, the market size further expanded to 50 million sq. ft and 750,000 seats. As per the JLL Research estimates, in the next three years, the co-working space market is expected to be over 1 million seats. Of these, nearly 1,030,000 seats are expected to be occupied by the top seven cities spread over 75 million sq. ft.
The demand for co-working space climbed from 1.3 mn sq. ft. in the first quarter (Q1) of 2019 to about 2.18 mn sq. ft. in Q1 of 2023. The top seven cities (Delhi-NCR, Mumbai, Pune, Bengaluru, Chennai, Hyderabad and Kolkata), together accounted for a growth of 90% in the net co-working space absorption.
Among the top seven cities, Bengaluru and Delhi-NCR together accounted for 66% (i.e. about 1.43 million square feet) of net co-working absorption in the first quarter of 2023. Other cities like Pune and Chennai together saw approx. 0.52 million square feet of co-working spaces being absorbed during the same period.
According to the latest data released by the real estate advisory and research group Anarock, out of a net absorption of nearly 8.2 million square feet across the leading seven cities, the co-working spaces accounted for a share of 27% in the first quarter of 2023. This was almost twice the share recorded during January-March 2019. In that period, flexible office space absorbed 1.3 million sq. ft. (13.97% share) of the total 9.3 million sq. ft., office space absorption.
Factors Behind the Mushrooming Co-working Spaces.
One prominent factor behind the proliferating market of co-working space is that, post covid-19 large companies are giving preference to the distribution of their workforce in multiple cities. They acknowledge the fact that flexibility is no longer just a need, it has become a reality.
Businesses like Amazon and Accenture are now setting up flex workspaces in cities like Bhopal, Coimbatore and Vijayawada. Similarly, cities like Bhubaneshwar, Chandigarh, Dehradun, Indore, Vizag and Kochi are also being considered emerging co-working markets.
The other major reason is the increasing ‘low vacancy levels’ in the major cities across the country. Cities like Bengaluru, Chennai, and Pune, have rather low vacancy levels in Grade A offices, thereby pushing up the demand for co-working spaces. In Delhi-NCR, the low commercial space vacancy levels have resulted in the growth of co-working office spaces in areas like Gurugram and Noida.
The rising cost of traditional office spaces, the growth of the gig economy and remote work, companies seeking to retain talent with flexible work options while optimising costs, reverse migration, cost of living, an infrastructural push by the government, and the government’s focus on promoting entrepreneurship and the efficient start-up ecosystem are other factors driving the growth of co-working office spaces in India.
Co-working Spaces: The Future
Co-working has established itself as a mainstream segment. The industry is equally attracting the attention of big and small enterprises. The Co-working spaces are constantly evolving to satiate the needs of hybrid teams and entrepreneurs. Within the co-working, some speciality businesses such as women-only co-working spaces or student co-working are also coming up.
New towns/cities continue to be added to the flex-workspace map. Although the cities of Delhi-NCR, Mumbai, Pune, Bengaluru, Chennai, Hyderabad and Kolkata have always been on the flex-workspace map. However, in recent times cities like Jaipur, Indore, Kochi and Lucknow have emerged as new destinations for co-working set-ups.
There is significant potential for expansion in Tier 2 and Tier 3 cities. As entrepreneurship and business opportunities spread across India, coworking spaces are likely to extend their presence to these emerging markets.
In addition, as the culture of ‘workation’ (a vacation that combines business with leisure), is progressively increasing in hill stations, rural backyards, panoramic countryside, etc; the co-working players will venture into these places as well.
The future of co-working spaces in India is expected to witness sustained growth, catering to a diverse range of professionals and industries.
