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With the rising need for efficiency and space management, corporates across the spectrum are pivoting towards shared office spaces or co-working spaces. A rising demand from freelancers, consultants and corporates spurred the growth of co-working spaces which increased by large proportions. With this expanding demographic, these spaces have led to the evolution in the function of businesses leading to a harmonious interaction between financial and human capital. More importantly, it has created a conducive ecosystem for the growth of start-ups and expansion of small and medium enterprises (SMEs).
Co-working spaces currently are not limited to small businesses or start-ups. Even major corporates are enthusiastic about the concept and form a significant portion of the occupancy share in this segment. The advantages of this model in the form of flexibility combined with amenities and a community-driven ecosystem are acting as a major draw for occupiers. In fact, the co-working space is rapidly emerging as a crucial player in the commercial real estate sector of India. According to estimates, there are approximately 325 to 330 co-working operators in the top seven cities in India. The growing demand is also an outcome of the aggressive expansion by established players as well as the entry of new operators. Data suggests that in those seven cities, the co-working share in office leasing has increased from 8% in 2018 to 12% in Q1 2019 indicating a strong and healthy demand for office space. Some of the renowned players that are at the forefront with major traction in this market include WeWork, Awfis Space Solutions, The Hive, and CoWrks, among others.
Another factor that is driving the impetus is the fact that millennials currently constitute a majority of India’s workforce. They are adaptive but always anticipate a drastic change to occur in the way people work. Flexible workplaces and a vibrant ambience help the new workforce to achieve peak levels of productivity and deliver better. While the concept has readily become entrenched in the metros, further demonstrated by the jump in average transaction size from 52,000 to 77,000 sq. ft from 2018 to 2019, Tier II cities are also opening up to this new concept, including Indore, Ahmedabad, Bhubaneshwar, Kochi and Jaipur.
Co-working spaces have now moved beyond their initial role of acting as providers of flexible, vibrant workspaces. Today, they are functioning as key enablers for both organizations that have begun to blossom as well as large corporates. The massive increase in space leased by large corporates is an indication of their growing importance in corporate Real Estate.
The prospect of co-working spaces in the future looks bright with demand drivers fuelling the rapidly growing requirement for high quality workspace equipped with a range of amenities.
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