Although major coworking operators leased only 1.2 million sq ft in 2016, which accounted for 3% of the overall leasing volume, Colliers forecasts that the plan is to lease 8 to 9 million sq ft by 2020. They also foresee that the concentration of coworking space will intensify further in Bengaluru, Mumbai, and Gurugram (Gurgaon) due to the availability of adequate infrastructure and opportunities for start-ups in those cities. Hyderabad may also pick up the pace as companies such as Apple, Google and Amazon, have recently taken large office spaces in the city which will create further opportunities for start-ups and a few SMEs. Among Tier II locations, cities that have a high presence of technology companies such as Pune, Jaipur, Chandigarh, Ahmedabad and Kochi should also witness the emergence of coworking hubs.
“As India is still on the verge of witnessing international players' presence, we expect the industry to see much more experimentation regarding amenities and facilities in such establishments. The changing dynamics will force developers/operators to differentiate their products in terms of amenities, offerings and quality of space. We are likely to see more and more strategic alliances between property owners and operators and emergence of newer models. India offers a great opportunity for coworking space operators to profit from rising demand for flexible, innovative and collaborative workspace designs”, said Surabhi Arora, Senior Associate Director Research at Colliers International India.
Colliers believes that the growth of coworking space poses no threat to property developers. On the contrary, can capitalise on the high demand for functional, flexible working space. Indian developers such as K Raheja, RMZ Corp and Embassy Group are some of the frontrunners, who appreciate the opportunities offered by coworking space. In our view, a strategic alliance between coworking operators, developers and investors will emerge as a new trend in India in the short to medium term. “Coworking spaces are improving collaboration and stress free working environment which helps develop an efficient and a “happy”, workforce. Not just the international operators, now the domestic players, are taking the concept to the next level as well” says Vaibhav Mahurkar, Director, Office Services at Colliers International India.
In 2016, the information technology (IT) industry represented around 58% of the total office demand in India and 41.6 million sq ft of office space was leased in top nine cities. With millennials representing the largest generation in the workforce and unprecedented focus on new workplace designs, work styles, and work culture; these factors have led to growth of flexible and specialised workspaces. The coworking industry is mainly dominated by startups followed by media, e-commerce companies and a few corporates and multi-national companies (MNC's).
Currently coworking operators have a small footprint in India, but they are slowly carving out a significant space in the real estate industry. Although factors such as flexibility, networking opportunity and cost-effectiveness will continue to drive demand of coworking spaces, the need for swing spaces, transitional workspaces and office solutions in multiple locations will further fuel the demand of coworking spaces.