The co-working space in India has been growing at an exponential rate in India and top executives of companies claim that the need for managed spaces within a short time in synchronization with the company’s real estate strategy and talent retention are two of the top factors driving this change.
“Co-working is currently being used to tide over immediate space requirements in tight vacancy markets which cannot be fulfilled by available spaces and situate short-term project teams in a collaborative environment,” Anshul Jain, country head and managing director-India, Cushman and Wakefield,
He also pointed out that co-working spaces served as an option to create flexibility in the overall real estate portfolio while also offering a dynamic and quality workplace for employees as a means to attract and retain millennial talent.
According to a joint study conducted by JLL and FICCI, the Indian co-working space segment has seen over two-fold growth in 2018 to reach 3.9 million square ft compared to 1.9 million square ft in 2017. In fact, the study shows that India Inc had already leased over 1.1 million square ft of co-working space in the first quarter of 2019, meaning that it would cross the 2018 threshold.
The report also claims that the growth was driven by the availability of new operators in the market which currently stands close to 330 operators in the top seven cities in India.
Ambar Mitra, lead of Real Estate & Facilities at Microsoft India also seconded Jain’s thoughts on co-working spaces. Mitra, looking through the lens of a company’s size and maturity, said that large MNCs look at co-working space basis their financial strength and real estate strategy.
“If they are cash-rich and focus more on their employee experience while keeping their Intelligent Workplace (IW) standards intact, then they would like to go in their own way of either leasing or buying. Having said that, if these companies have a robust long term plan, then to reach that stage they will need a short term to a medium-term solution. In that situation, they will look for enterprise model/managed space which may not be the full-blown IW standard but with their own IT and Security set up,” he explained.
However, when asked about the challenges in implementing a co-working strategy and its return on investment, Mitra said that companies should look at understanding and providing flexibility for employees and ensure that employee experience shouldn’t turn negative.
He added that an increase in productivity has a strong correlation with employee experience. “If this is taken care then any investment made in real estate is worthwhile,” he said.
According to the JLL-FICCI report, the Indian co-working segment faces challenges and issues such as data security and privacy issues, potential impact on branding and orthodox attitude of stakeholders in terms of further adoption.
Hinting at some of these issues, Jain said that companies, mostly, face the challenge of marrying the company ethos and identifying to an impersonal space like a co-working space when shared with other occupants.
Pointing our that issues around privacy, data security, ambient noise could be major factors he said that while India Incorporated is moving towards an activity-based working concept and increasing social interaction between the employees to foster a more cohesive, collaborative and community feel to the workplace, a company needs to keep its employees invested into the brand as well.
Jain also spoke on the return of investment and said that it was no longer about saving cost and was more of a strategic HR-driven function.
“So metrics around attrition, the attractiveness of the firm for new talent, productivity measures and employee participation in brand-building are key things which a firm will consider when measuring their returns from a coworking strategy in their portfolio,” he said, adding that from a cost perspective, capex on potential fit-outs, rent and CAM charges and other additional expenses related to operations should be largely considered.