As India morphs itself into a center of excellence for global talent around the world, businesses need spaces that are conducive to innovation and creativity. Companies looking to meet growing demand will need to invest heavily in their infrastructure and R&D capabilities. This means that the real estate market will need to provide more premier facilities and business support. Tenants prioritize purpose-built spaces for their needs, driving a flight-to-quality trend. As a result, real estate developers and operators are integrating flexible workspaces as a part of their overall offering to meet evolving market preferences. Co-working companies are uniquely positioned to lead the transformation into real estate as a service. Since the introduction of the concept to India in 2015-16 co-working spaces have been growing exponentially, relative to traditional real estate. Anarock reports that the absorption of co-working spaces has grown to 27% of total commercial real estate (CRE) absorption in Q1 2023 vs. 14% in Q1 2019.
Today, the Indian workplace has transcended the conventional boundaries of the traditional 9-5 model, embracing a more dynamic structure. Companies were accustomed to investing heavily on CAPEX and by virtue of that investment be compelled to enter into long-term lock-ins. While companies will continue to invest in this model for key locations (headquarters locations, key development hubs, R&D locations, etc.) there are an increasing number of CRE leaders in these companies looking to add co-working locations into their real estate strategy. For companies that need small office locations in different destinations, or options to be closer to their employees co-working spaces offer a flexible plug-and-play model that allow companies to ramp-up or reduce the number of seats with a much shorter lead time.
This trend is being borne out by a widely reported shift in customer type. Traditionally, the preserve of the startup, co-working spaces are now seeing take-ups increasing from large MNC companies. These companies are occupying fully serviced, built-to-suit spaces completely operated for them by co-working companies. The rise of the managed office solution is driven by the simplicity of use.
Instead of having to identify a space, design and build and subsequently manage; all this effort is managed by the co-working operator. This has democratised office spaces to the degree that a company can offer their employees a premium, well-designed, fully serviced space without having to manage a complex set of vendors and navigating regulatory requirements. Like the early days of online aggregators in the travel industry, co-working spaces are seeing the emergence of online aggregators, making finding the right workspace for you more accessible than ever before.
Technology is a key area of investment for co-working operators. Offering a completely digital workspace experience including booking meeting rooms, mobile access and requesting for help/support is consistent across operators. They are also investing heavily in technology to help their customers manage a hybrid work culture. Employees of customers are now able to book seats, be made aware of when their key collaborators are physically in office, among more features that allow customers to optimise their workspace utilisation.
Studies demonstrate how a vibrant, ‘amenitised’, experience driven workspaces are becoming increasingly critical to employee acquisition, engagement, and retention. Top-quality buildings in major urban centers with amenities catering to a “live, work, play” environment continue to be in demand. Workspace design isn’t about desk and chairs any longer; creating spaces that foster collaboration, allow for focused work and provide informal ‘third places’ to employees like they would do at home. Learnings from managing millions of square feet of workspaces allow co-working operators to be experts in office design.
Assistant Vice President
Transformation, COWRKS India
The art (well-designed vibrant spaces) and science (data-driven insights on utilisation and collaboration to focused space ratios) of office design are uniquely married together by co-working operators.
Co-working spaces are due for a rebrand to Serviced Workspaces or Real Estate as a Service as they continue to build expertise on design, technology and employee experience while leaving companies to focus on their business without distraction.
