Over 8.1 Mn Sqft Flexible Workspaces occupied as of April’18; Millennials set to drive the demand
- In Q1’18, leasing by flexible workplaces accounted for 11% % of the total leasing
- Corporates also realizing the potential of co-working spaces, providing networking and collaborating opportunities
- Flexi-seating rental in co-working spaces is generally lower by 8% to 20%, compare to traditional offices, while the fixed seating is at par but comes with all the frills co-working spaces are offering.
National, June 12, 2018: The love for co-working spaces has been on a rise. According to the report titled ‘Who Moved Your Workplace? Flexible Workplace On Turbocharge Mode’ by Cushman & Wakefield, picking up pace in the recent past, co-working spaces have become a place for collaboration, networking and innovating with like-minded millennials. In the first quarter of the financial year 2018 (Q1 FY’18), leasing by flexible workplaces accounted for 11% of the total leasing, a number that was negligible in the corresponding quarter of the previous year. As of April 2018, flexible workplaces occupy more than 8.1 million square feet (msf) of space spanning across the top eight cities in the country.
This number was led by the hub of start-ups, Bengaluru. The city accounts for over 32% of the total flexible workspace stock, with about 58% of the co-working space located in suburbs of Bengaluru such as Outer Ring Road, Hosur Road and Koramangala. Mumbai stood second with 25% stock. Majority of the centers in the financial capital of the country are located at the western suburbs between Bandra and Goregaon.
Driving the demand
While startups and freelancers still dominate this segment, the corporates are also emerging as the demand drivers for shared working space.
- Fueled by startups: India is going strong with over 5,200 startups operating in the country. The country today stands at the third position in terms of number of startups only after China and the US. Poised to grow 2.2 times to reach 10,500 by 2020, the startups will remain the dominant clientele for co-working spaces.
- A business solution for corporates, too: The concept of contractual jobs is now picking up in the corporate world. On-demand jobs, outsourced services and short-duration team put together make up for a flexible workforce that can be easily accommodated in a shared working space. This allows the corporate to lease a space for a selected period of time. Leasing co-working space is also beneficial for corporates planning to foray into new geographies without incurring high expenditure.Some of the corporates that have leased co-working spaces in top cities in the country include as Adobe, Cisco, Gartner, E& Y, Dell, Airtel, Nearbuy, Xander, Godaddy, HSBC, Truecaller, etc.
Easy on pocket
According to the study, costs incurred in a Tier-I co-working space in CBD and suburban locations is 20% lesser when compared to a Grade A 60 sf traditional office. For instance, in Bengaluru’s CBD location, co-working flexi-seat rental is 20% cheaper than traditional Grade A office of 60 sf in the same location while the numbers stand on par in Gurugram and in Mumbai these seats are 8% cheaper. However the fixed seats at the co-working spaces costs generally at par with traditional offices but comes with all the services and an environment which is cutting edge and very modern. It should be noted though, that most of the co-working operators are in an ‘investment’ mode and therefore pricing dynamics is likely to change as the businesses matures.
“Millennials are a formidable part (46%) of the India’s workforce. This workforce is now venturing in freelancing, entrepreneurial and temporary work opportunities, making up for a large percentage of people opting for flexible workplaces. The number is only set to grow as a higher number of millennials enter the workforce, propelling the nation’s labor force to the world’s largest by 2027.Not only Freelancers, but large corporations are also partnering with co-working spaces so that companies have better access to innovators, innovations, talent, work-life balance and reduced real estate costs.
Anshul Jain, Country Head and Managing Director, Cushman & Wakefield India
Types of co-working spaces:
The co-working domain operates under two business models – straight lease and revenue sharing. While in straight lease the operator has a better control on the space, in revenue sharing the landlord allows the operator to focus on their core competencies to generate better revenues.
Some salient features of straight lease are:
- Asset heavy
- Capital intensive
- Property leased by operator
- Full control of services, amenities, branding
- Higher risk
- Optimize revenue through membership
And, for revenue sharing are:
- Asset light
- Operator undertakes fit-outs, branding
- Co-working company gets a fixed share of revenue
- Various ratios for revenue share
- Allows individual/company to focus on core competency
For further information, please contact:
AVP – Strategic Marketing
Head of Strategic Marketing - India
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that delivers exceptional value by putting ideas into action for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, advisory and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
Cushman & Wakefield established operations in India in 1997. We are a strong team of over 2,800 employees, operating across Gurgaon, Mumbai, Pune, Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad. In addition, we service over 200 other cities such as Ahmedabad, Nagpur, Cochin, Mysore, Mohali, Chandigarh, Goa, Ludhiana, Jaipur and Coimbatore amongst others.