The office space format has come a long way since it was regarded solely as a place of work at a convenient location, with plain desks, chairs and cabins comprising the set up. Over the past few decades we have seen the workplace evolve significantly in terms of space utilization, equipment placement and automation. Over the past decade especially, the role of the work environment in enhancing employee productivity has been acknowledged as office design, amenities and even colour have been observed to have a significant impact on the operational efficiency of the employee.
Recent research has also shown that the introduction of natural elements such as fresh air, sunlight, greenery and even natural smells and sounds in a workplace play an important role in reducing the
employee’s work stress and enhancing his creativity. With newer business avenues opening up, office space design continues to evolve at an incessant pace, covering not only its structural facet but also involving aspects such as amenities and the digitalisation of the office.
It comes as no surprise that with improvements in office space design and development and the varied priorities of the new age employer, a workplace today has ceased to be a single, fixed address in a commercial district. Like most commodities in present times, workplaces, too, have come to be re-defined as space that can be accessed anytime and from anywhere, providing Just-In-Time
services enabled by technology. While this forms one aspect of coworking, the concept of co-working spaces essentially involves groups of individual professionals and small and increasingly large-scale businesses who share workspaces and breakthrough ideas, enhance their business horizons and gain a fresh standpoint on their own businesses by the virtue of sharing workspaces. In an age when business cycles have dramatically reduced and companies need to constantly innovate to survive and remain competitive over the long term, a co-working workplace may provide the environment that fosters fresh thinking and innovation.
CO-WORKING IN INDIA
India, today, is witnessing a proliferation of start-ups and SMEs, buoyed by the government’s concerted efforts to create a sustainable eco-system for entrepreneurs in the country. On their part, the entrepreneurs—a large number of them being millennials—believe in harbouring global aspirations with a staggeringly ambitious mind-set that was not in evidence a few years back. This provides a perfect platform for dynamic co-working business centres to cater to the office space needs of these aggressive growth-seeking start-ups. Besides companies, people such as business nomads, expats or those travelling to the country for a limited period are amongst those preferring to work out of plug-and-play co-working spaces. Another constituent is the growing volume of freelance workers (gig economy) who support corporate entities with specialised outsourced services in the advisory, consulting and designing domain such as recruiting and advertising. It is apparent that corporate supply chains are broadening and lengthening in India today. Till a few years ago, these businesses would have opted to work from coffee shops or so called 3rd spaces. Thus, with the increasing number of new and growing businesses, there is a palpable demand for co-working spaces in metro cities that had hitherto been lying untapped.
There are several benefits of working in a co-working environment. Start-ups are characteristically capital poor and need to keep their cost structure at the bare minimum. Real estate expenses make up approximately 9% – 12% of overall operating costs (can differ from market to market) for an established corporate and could account for more in a start-up. Co-working spaces also enable the typical start-up to bypass the fixed rental cost with the additional capex requirements of fit outs and operational hassles of a traditional office space and opt for the flexibility of a co-working office. This not only allows the new business to occupy a contemporary workplace on a per seat basis but also the flexibility to increase, reduce or to exit the workplace. This is a critical feature in early stage businesses particularly. More importantly, it allows them to focus on their core business rather than non-core operational areas such as real estate. This is also why additional services such as print-room and repo offered within co-working facilities are an attractive proposition.
INDIAN CO-WORKING MARKET PLAYERS
While Co-working as a concept is a fledgling phenomenon in India, it is part of mainstream office parlance in the much more evolved markets of the west such as New York and London. The global acceptance of this category is no mean feat considering that the concept that was conceived as a grassroots movement of freelancers, startups and solo entrepreneurs seeking to establish collaborative co-working communities, opened its first modern day co-working space in 2005. The number of Co-working spaces across the globe has grown by 3,050% since 2010 while the number of people working in these facilities has exploded by close to 8,000% in the same period by growing from 21,000 seats to 1.7 mn seats, according to Statista Dossier.
- Due to the changing perceptions of the office, the workplace is now being looked at as an environment that needs to be managed and optimised. It is being viewed as an instrument that could drive a dynamic and vibrant culture of corporate productivity impacting the financial, cultural and environmental ethos of the organisation. This far reaching agenda warrants an element of specialisation. The co-working operator is filling this niche and is fast being regarded as a specialist in workplace management who can cultivate an environment of collaborative enterprise that yields tangible benefits to the occupier.
- A co-working operators’ need to outperform market rents also tends to improve the prospects of the entire property they occupy. This has also led the landlord to consider the operator as collaborator rather than a competitor.
- The number of Co-working spaces across the globe has grown by 3,050% since 2010, while the number of people working in these facilities has exploded by close to 8,000% in the same period by growing from 21,000 seats to 1.7 mn seats, according to Statista Dossier.
- India is at the cusp of a co-working revolution with several large players spread across the country. There are close to 200 co-working operators running an estimated 400 shared workspaces across the country today.
- While co-working companies took up a modest 0.17 mn sq mtr (1.8 mn sq ft ) in 2017, the first quarter of 2018 itself has exceeded the annual tally of 2017 at 0.19 mn sq mt (2 mn sq ft).
- The co-working phenomenon is gaining wider acceptance with the mainstream Indian occupier as big corporates today constitute approximately 50% of the overall client roster. This share can go as high as 80% in the more premium priced offerings.
- The expansion plans of major players and the increasing appetite for this format from occupiers, property owners and co-working operators should see annual transaction numbers triple from current levels over the next 3 years.