# altcoin / # bitcoin / # blockchain / # exchange / # events / # ICO / # trends / # finance / # Russian news

Office norms changing to shared space: Companies warm up to flexible workspaces

As office rules remain in a flux, with all models operational simultaneously in most places, there is renewed demand for co-working spaces. Flexible lease formalities, cost-effectiveness, agility and customised workspace solutions, plus need for companies to expand to different locations at affordable operational costs, are all factors in this favour.

Though the office market across India saw robust recovery in the first quarter of 2022, prevailing uncertainties have resulted in occupiers being cautious to commit long-term leases and looking at flexible options. “Leasing activity in Indian office markets has remained at 50% of its pre-Covid peak, enterprise leasing in flex spaces has already reached 80% of pre-pandemic levels, indicating how demand from occupiers is being reshaped by their cost optimisation and flexibility needs,” says Karan Singh Sodi, regional managing director, Mumbai & Ahmedabad, India, JLL.

The flexible workspace model is expected to constitute 30% of the overall office sector by 2030, as per Harsh Lambah, country manager India and vice-president sales – South Asia, IWG, a shared office service provider.

As per flex market overview published in a recent ‘Flex your workplace’ research by JLL and Awfis, the top seven cities – Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune – have over 1,200 operational centres, and 56% of the total operational centres are in Bengaluru and Delhi-NCR. Over 90,000 seats have been leased in the last two years, with Bengaluru and Mumbai accounting for about 51% of enterprise activity in the flex space.

While the demand is expected to soar in the metros, Tier II cities will be the next growth frontier. At co-working space Awfis, the demand for seats has gone up 5x when compared to pre-pandemic levels. Post-pandemic, 60% of the seat occupiers (employees of corporates) in Tier I have moved to emerging metros like Nagpur, Bhubaneswar, Indore, Jaipur, Coimbatore, Ahmedabad, Kochi, Chandigarh, etc. Leveraging the same data, Awfis has expanded its legs in the interiors where ITEs, BFSI, unicorns and soonicorns are able to provide a professional work environment to their employees.

“If shared spaces industry occupied 25 million sqft of commercial real estate in India, today it is touching close to 55 million sqft. Reverse migration, distributed workforce, remote working, and work near home have made concrete changes in the way Indians work,” says Amit Ramani, CEO & founder, Awfis which has presence in 14 cities, and has partnered close to 1800 corporates.

Similarly, WeWork India has 36 spaces spread across six key cities. Currently, enterprises account for 70% of WeWork India desk usage with companies such as Colliers India, TATA Play Broadband, Netflix, Lenskart, Fab Hotels and 3M, among others, while the remaining 30% consists of startups, freelancers, and SMEs. “We intend to expand our portfolio by 1 million sq ft in 2022 with over 50% of the planned development pre-committed by enterprises,” says Karan Virwani, CEO, WeWork India.

“Currently, shared offices occupy under 5% of India’s total office space. This segment will gradually inch up in its share of India’s total office leasing pie. India’s rapidly growing start-up ecosystem has now more than 61,400 start-ups recognised as of January 2022 as per the Economic Survey. During the pandemic, the big enterprise clients who traditionally lease large offices have transitioned to shared offices,” says Gagan Randev, executive director, India Sotheby’s International Realty.
Many occupiers are also expanding offices to new geographies to be closer to their workforce. Co-working and managed service space operators are top choices for such companies as they offer a hassle-free experience. “Vacancy levels across India for ready to move in space have come down in the past few months due to high demand by tech occupiers and home-grown start-ups. Start-ups prefer to operate from these spaces to focus on their core business activities and hybrid working models give the flexibility to experiment with different seating configurations which is difficult to do in traditional office setup. Even landlords are looking at increasing the share of flex in their portfolio to attract new occupiers and support growth of their existing clients,” says Arpit Mehrotra, managing director, office services, South India, Colliers, a diversified professional services and investment management company.

During Covid, the commercial property rentals were corrected by up to 25% in many macro markets. “Today, a company can save between 18 and 24% on office operational expenses just by shifting from a traditional lease to co-working. This saving is the main driver for co-working growth post-pandemic,” says Aditya Verma, CEO, The Office Pass, who operates spaces in Gurugram, Noida and Delhi.

Coworking spaces are a new revenue stream for hospitality brands too, like Accor’s ibis properties that offer work@ibis. “As newer companies are setting up bases in India, the shared spaces model will continue to grow, especially amongst companies in their incubation stage,” says Puneet Dhawan, senior VP, operations, Accor India & South Asia.