Co-working surge: Reverse migration of employees pushing companies to set up offices in tier-II towns

10 May 2022

Co-working surge: Reverse migration of employees pushing companies to set up offices in tier-II towns

  • Financial Express

The demand for co-working spaces is rising in tier-II and beyond regions with offices looking to optimise costs while also ensuring employee retention by allowing them to work from their hometowns. The demand surge is courtesy of start-up firms, IT and service sector companies.

With trained professionals and employees shifted back to their hometowns over the last two years of the pandemic, companies are now going an extra mile to retain their employees while also starting to work in a hybrid model. Companies in the IT and service sector besides start-ups and unicorns have started looking for co-working office spaces in tier-II and beyond towns. This has given a push to the popularity of co-working spaces in smaller towns even as popular consensus assumes that the demand will only fall with the world gradually emerging out of the Covid pandemic. “There has been a 45 per cent spike in demand for enterprise-managed office spaces in Q1, a lot of which comes from tier-II and -III towns. Given the steadily increasing demand from enterprises, we hope to at least double our workspace portfolio in these cities by the end of 2022. Essentially, we are witnessing demand from large multinationals, fortune 100 companies, including IT companies, professional services, and start-ups/unicorns,” said Sanjay Chatrath, Managing Partner-India, Incuspaze.

The past two years have witnessed a noticeable change across segments and across the ways people and companies are operating. One such change has been the reverse migration of trained professionals from metro cities to tier-II and beyond areas. And companies/ businesses are not minding this. They are now looking to optimise costs and ensure employee retention by allowing employees to work from their hometowns, which has facilitated the expansion plans of co-working spaces for tier-II cities and beyond, said a JLL-Awfis survey. “Businesses of all sizes from different industry segments have moved their base or have expanded in smaller towns seeing the business opportunities, ease of hiring new talent with lower cost and also to offer flexibility to the existing employees. While these companies are entering new locations, they are adopting flexible office spaces as it offers lower cost to run the setup and of course flexibility. We are currently doing 35 per cent of the business in tier-II and -III cities. Companies from services sector, tech, MSMEs, consulting and IT sector and also sales offices of enterprises are looking for spaces in these regions and they mostly average around 50 seats at one location,” said Paras Arora, CEO & Founder, Qdesq.

Today, companies across sectors are setting up their regional or satellite offices closer to their employee base, instead of going the other way around. “They are approximately looking for space between 100-500 seats to begin with and plan to ramp up as they get more confidence operating from these cities,” said Sanjay Chatrath.

So, which are these untapped markets/ towns that’s turning into the new ‘corporate hubs’ of the country? According to the JLL-Awfis survey, tier-II markets like Ahmedabad, Indore, Jaipur, Kochi, Bhubaneswar, Chandigarh and Lucknow as the places where flex operators have the strongest leverage to tap into growing demand. “Considering the growing opportunities in many of the tier-II and -III cities, few large corporates are seeing it an opportune time to expand their base there, leading to the rise in trend of flexi spaces vying for spaces in tier-II and -III cities over the last one year,” said Anuj Puri, Chairman, ANAROCK Group. Pointing to a host of developments happening in the managed office space, he further said that Smartworks is in process to finalize co-working spaces in tier-II cities such as Jaipur and Coimbatore under their plan to invest Rs 250 crore pan India. Awfis opened workspace in Ahmedabad. The 25,000 sqft space spread across two floors, is in line with the company’s aim to expand into tier-II markets. IndiQube plans to add 5,000-10,000 seats in tier-II cities. IWG has signed a deal with Conjoinix for 18 centres across Delhi-NCR, Haryana, Uttar Pradesh, Jammu & Kashmir, and Gujarat. The company has presence in tier-II cities like Vizag, Coimbatore, Ahmedabad, Lucknow, Chandigarh, Jaipur, etc. and plans to expand further to Panipat and Cochin. Simpliwork will look at tier-II cities with captive demand and is seriously considering Kochi, along with Jaipur and Ahmedabad.

How appealing is a co-working space in smaller towns?

Many companies had, during the pandemic, given up their office spaces and are now looking for smaller offices as they are starting with a hybrid model of working. And when looking for such office spaces, these companies are realising the benefits of getting office spaces in smaller towns as well. “Companies are looking for spaces in these towns to provide much-needed flexibility to their workforce while also maintaining the overall well-being of their employees,” said Ravindra Pai, Managing Director, Century Real Estate.

Besides their employees who have now moved closer to their hometowns, the companies are also finding this option more economical while expanding their reach to potential markets in tier-II towns. “The average in these areas is Rs 6000 + GST and tier-I tariff would average at Rs 11,500 + GST as the maximum centres in tier-I are branded operators. We are seeing a huge demand since the beginning of Q4 of 2021 and the demand has grown 50 per cent month on month,” said Paras Arora.

Nevertheless, opposed to the popular belief that with the pandemic subsiding, the demand for co-working spaces will fall too, the industry is witnessing a clear surge in demand especially from tier-II towns, if not metro cities. “Even though companies are now returning back to their workplaces, flexible working is the future. As per a report by CBRE, the sector is expected to grow at 10-15 per cent Y-O-Y in the next three years. This growth will likely be driven by the expansion in tier-II cities, all over the country,” said Chulamas Jitpatima, Country Director, MQDC India.

This story appeared in the 30 March, 2022 issue of Financial Express and was originally published  atCo-working surge: Reverse migration of employees pushing companies to set up offices in tier-II towns- Financial Express

Future-proofing the workspace through hotelisation

30 March 2023

Future-proofing the workspace through hotelisation

  • Posted by Awfis Editorial

Collaborative and flexible offices are being developed with hotel-like services and amenities focusing on tenants’ workplace satisfaction. The focus is on adding a premium to these offices and reaping benefits. And shared workplaces are leading the transformation.

Two offices located adjacent to each other may have different rents. It is possible as one building could be future-ready and the other may lack the necessary design creativity that meets the occupier’s expectations of a truly collaborative workspace.

Interesting office trends have emerged in recent times: While designers and architects are designing green pods for those who prefer working from home, ergonomically curated, biophilic office designs are increasing. However, the two trends are acting against each other – while the former promotes a hybrid work culture, the latter indicates a re-entry to offices, giving way to a more collaborative workforce. As the opposing ideas continue to thrive, there are common threads — workspaces are being designed to incorporate keeping in mind the well-being of the occupiers, and offices are getting equipped with a wide range of amenities. The impact is visible on the rent these offices demand.

The hotelisation of offices indicates the workplace transformation into a commercial space like a hotel. It treats tenants as valued guests and provides building occupants with the same quality of service as they would find in the hospitality sector.

And the hotelisation of the workspace is here to stay.

So what is changing?

The coronavirus has been a game-changer for offices. More than two years into the pandemic, working from home or remotely seems like an increasingly permanent proposition. With people wanting to increasingly work in a hybrid mode, workplace evolution has picked pace. Features like “plug and play” are offered to all. Access to a cafeteria or a cloud kitchen, tenants’ lounges, coffee bar, parking, concierge, shuttle buses, discount deals from local restaurants and shops, conference centre management, internal community events, fitness centre and wellness classes are all features of the hotelised workplace.

Ergonomically designed workplaces with biophilic features are said to enhance the connectivity of building occupants with the natural environment through direct and indirect nature and space and place conditions. The design includes an open office design, hot-desking, and coworking spaces. Hence, the evolved workplace design is an open and collaborative environment that makes people feel welcome and energized to work.

The factors behind

The way businesses approach real estate decisions is being reshaped by technological advancements, a more mobile workforce, and uncertain economic growth. Amidst the uncertainty, landlords have realized that to improve tenant retention, command better rental values and create future-ready offices, they need to take a more service-oriented role. And occupiers continue to demand more flexible lease terms, better quality in-house services and enhanced offerings for well-rounded end-user experiences.

The impact

The trend is already impacting the design of commercial real estate (CRE). First, it has pushed landlords and occupiers towards better asset management practices. As a result, landlords now focus on getting the right set of services and designing a more open and collaborative workspace.

Second, the trend has fundamentally spurred demand for quality offices. Both old and new portfolios are being developed to meet the high demand. Hence, various redevelopment projects have resurfaced, adding to Grade A supply of offices. And shared workplaces are leading this change.

The upside of hotelisation

Hotels have a unique selling proposition that businesses want to replicate, like having a 24/7 service, a consistent and standardized experience, and a host of facilities. There is more focus on creating a warm and welcoming environment by incorporating different elements like the use of natural light, nature sounds, furnishing with upholstery, and other materials that are not typical in an office environment.

Hotelisation is now a way to future-proof the existing buildings. It is helping building owners to command higher rents and remain relevant for tenants in a pandemic-like situation – a trend visible with leading shared office operators. The transformative strategy of hotelisation worked for most of these operators, who wanted to differentiate their offerings through customized service offerings.

However, office owners should exercise caution. As one replicates the services of a hotel, he must strike a balance between catering to tenants’ higher expectations and the incremental costs associated with designing, building and managing high-quality amenities. Focusing on people-oriented services might add to the overall experience. That should hold bring success in the long run.

(By Sumit Lakhani, Deputy CEO, Awfis)

This story appeared in the 28 November, 2022 issue of Financial Express and was originally published at: Future-proofing the workspace through hotelisation

A number of small businesses want employees to work from office instead of WFH or hybrid: Survey

29 March 2023

A number of small businesses want employees to work from office instead of WFH or hybrid: Survey

  • Posted by Awfis Editorial

Ease of doing business for MSMEs: Among sectors, banking, insurance and technology companies will lead the demand for office spaces in 2023 as the financial services industry’s quick embrace of digital platforms and the availability of tech-savvy individuals in India, the survey said.

Ease of doing business for MSMEs: More than a year after the Covid pandemic peaked in the country, a number of large businesses are still looking comfortable with the hybrid mode of working in comparison to small businesses. According to a survey by co-working companies Awfis and Qdesq, while 70 per cent of large businesses surveyed are in favour of working in a hybrid mode, more than 70 per cent of small business respondents in the survey cited work from office as their preferred mode of work.

The report Indian Flex Occupier’s Survey 2022, however, didn’t mention the survey methodology including the number and size of businesses surveyed, the duration of the survey and the process of recording respondents’ feedback.

Amit Ramani, Founder & CEO, Awfis said the long-term future of the entire business will be determined by the current occupier patterns, which are also creating new expansion opportunities for flex space operators in the short term.

“This is an opportune time for flex space operators to reinvent their workspaces, diversify their presence in cities, and carefully analyse tenant expectations to accommodate them effectively as flexibility continues to hold sway over workplace strategies of enterprises of all sizes.”

“This is an opportune time for flex space operators to reinvent their workspaces, diversify their presence in cities, and carefully analyse tenant expectations to accommodate them effectively as flexibility continues to hold sway over workplace strategies of enterprises of all sizes.”

A similar survey on workplace strategy conducted by commercial real estate services provider Colliers in September this year noted that 60 per cent of small firms are currently working all days from their offices while only 10 per cent of the large enterprises are preferring five-day work from office, indicating that offices are finding more favour from small businesses. The survey was conducted in May and June this year and received 300 responses from ‘occupiers’ including small, mid and large-sized firms in India.

The market for co-working space has grown steadily over the last few years with businesses looking to go hybrid particularly post-Covid. There were close to 3.7 lakh flexi seats spread across tier 1 and tier 2 cities across the country and was estimated to grow at the rate of 15 per cent, compounded annually, for the next five years, a report by real estate services company Anarock and CII in December last year noted. According to the report, there was nearly 35 million square feet of total flexible stock available across the country, of which 71 per cent was from large players.

This story appeared in the 23 November, 2022 issue of Financial Express and was originally published at: A number of small businesses want employees to work from office instead of WFH or hybrid: Survey

Flex workspace market to flourish as 35-40% of companies prefer hybrid working

29 March 2023

Flex workspace market to flourish as 35-40% of companies prefer hybrid working

  • Posted by Awfis Editorial

To ensure the seamless execution of hybrid work model amid office expansion in multiple locations, organizations are increasingly partnering with flex space operators.

The onset of the pandemic led to the migration of the Indian workforce back to their hometowns, and as flexibility became the core of workplace strategies during the pandemic, the workforce still demands similar flexibility in the post-pandemic world. Consequently, organizations of all sizes are adopting a hybrid work model to offer the benefits of both, working from home and working from the office, to their employees, according to the ‘Indian Flex Occupier’s Survey 2022’, done jointly by Awfis, India’s leading network of co-working spaces, and Qdesq, a tech-enabled workplace provider.

To ensure the seamless execution of hybrid work model amid office expansion in multiple locations, organizations are increasingly partnering with flex space operators, and 35-40% of companies are embracing the idea of hybrid working, making an ideal scenario for the flex market to flourish.

As per the survey, with things setting back to normal and offices reopening, the majority of the workforce prefer to work 5 days/ week from the office, an environment they feel will be healthy for higher productivity, better team collaboration, and in-person interactions, benefits that were traded for the comfort of working from home.

The second best-preferred model of working is hybrid, where occupiers prefer to enjoy the benefits of working from the office as well as home, thus helping them attain the work-life balance, a demand which peaked post-pandemic.

However, an interesting point to be noted is that the eagerness to work from the office remains robust among the occupiers, whether they choose to work 5 days a week or 2 days a week from the office.

Commenting on the same, Amit Ramani, Founder & CEO, Awfis, said, “The long-term future of the entire business will be determined by the current occupier patterns, which are also creating new expansion opportunities for flex space operators in the short term. This is an opportune time for flex space operators to reinvent their workspaces, diversify their presence in cities, and carefully analyse tenant expectations to accommodate them effectively as flexibility continues to hold sway over workplace strategies of enterprises of all sizes.”

“The pandemic-induced shift in occupier demands completely transformed the coworking sector in India. In times of uncertainty, the coworking industry saw a new set of workplace requirements that later evolved into a new style of working after the global affliction. At Awfis, we recognised these changes as a revolutionary growth opportunity and immediately redesigned our products through innovation, paving the path for success, growth, and expansion,” said Sumit Lakhani, Deputy CEO, Awfis.

Paras Arora, Founder & CEO, Qdesq, said, “The post-pandemic era is a witness to the deployment of new workspace models to maintain profitability, instil work flexibility and employees’ well-being. No longer confined to small startups, the flexible workspace segment, today, is embracing the arrival of various big enterprises. As firms continue to evolve with the changing market dynamics, the workforce expectations, too, have changed with new working models like hybrid, work-from-home, and working from office coming to the fore. Amid such new and emerging trends, the need for key stakeholders to understand the mindset of modern-day businesses and their workforce to make informed decisions has become imperative. Our latest survey report, aimed at offering a better perspective, gives valuable insights into the changing preferences of flexible occupiers. It highlights the key impetus for enterprises to finalize the workspace, amenities priorities, and perspective on tech enhancements, among others.”

The survey shows how occupier needs have drastically evolved and will turn out to be favorable for the coworking industry’s growth. The majority of respondents are ready to partner with coworking players to seamlessly implement a distributed workforce strategy, while 30% of respondents are looking for cost-effective alternatives to rental offices for financial flexibility and the remaining respondents want to choose managed offices to free themselves from workspace administration responsibilities, which can otherwise be professionally managed by office space providers.

This story appeared in the 23 November, 2022 issue of Financial Express and was originally published at: Flex workspace market to flourish as 35-40% of companies prefer hybrid working