Co-working players have bridged the gap between supply and demand mismatch in the past 3 years by providing innovative and affordable solutions to the market.
Rising entrepreneurial spirit across the globe in the past two decades has led to disruptive entrants in almost all industries. Their innovative solutions coupled with visions for a dynamic future have transformed lives, cultures and economies. Some big Disruptors of their times are Amazon (1994), Netflix (1997), iPod (2001), YouTube (2005), Uber (2009) and Airbnb (2008). To bring in perspective, one can look at Uber’s journey and the way it brought in lower cost taxi services using a mobile app. Since, its inception the company has completely transformed cab rides making it the new normal.
Disruption is at the core of innovation by exploring an industry and discovering a new way that provides an advantage over the current approach– such as–‘shared workspaces’ that are disruptors for the commercial real estate market. A few years ago, co-working laid the foundation as a radical concept thatemerged to disrupt the workspace dynamics in India, and has gained widespread acceptance and success.
Co-working players have bridged the gap between supply and demand mismatch in the past 3 years by providing innovative and affordable solutions to the market. Initially, it was only freelancers, budding entrepreneurs, and start-ups with constrained budgets that relied on co-working spaces. However, with negligible capex requirements, affordable renting options, innovative and collaborative workspace designs, co-working spaces are attracting larger enterprise customers as well.
Around 90% of Asia’s top 200 occupiers are considering using shared workspaces while 56% are already using it. This is evidenced by the percentage of deals for 15 desks doubling from 21% in 2015 to 48% in 2017. Even the average lease term of shared workspaces is now over 24 months, exactly double of what it was in 2013. Co-working is now a fundamental part of the CRE leasing activity and a full-fledged sector in its own right, giving tough competition to conventional office spaces.
This year by September, Co-working service providers had already absorbed over 10% of the total office space in the top 7 markets in India. (Source: JLL). In the first quarter of 2018 itself, co-working had transacted about 2 million square feet commercial realty; way ahead of the 1.8 million sq ft in2017 (Source: Knight Frank). It is expected to grow 3 times by 2021, leading to massive opportunities for the co-working business in the country.
Large corporations have used the workspace as a driver of dynamic and vibrant culture to drive productivity and innovation. The gap in technology and design innovation is being filled by co-working players by providing an array of facilities in the administration domain like access cards, attendance monitoring, invoice systems, app-based bookings, tech savvy meeting rooms.
These factors along with the growing demand for Grade A workspaces by SMEs and the rise of entrepreneurial aspirations of Tier 2 cities gave an impetus tothe growth of the co-working segment across the country. Co-working today eases the burden of space logistics, converting a company’s fixed costs into operational costs. The shared workspace as part of the portfolio of large companies is expected to be 20-25% of the overall leased space by 2022.
2019 will prove to be the year of exponential growth for co-working industry with the expected growth to be 4 times – 8 times of the current size of the industry.
As the youngest workforce in the world, India is spearheading the co-working revolution; and will shift the workspace dynamics for larger share of the market in 2019 with technology, innovative space design and flexibility driving factors for change. Design will remain at the core while shifting from aesthetics to propelling productivity, creativity and innovation. Distinctive amenities catering to the customised needs of community members and companies will be allocated to further aid productivity.
In the past 3 years, co-working has moved from being a peripheral discussion to bea mainstream industry that is driving value for the customers and creating new sources of income for new age businesses. In the coming decade, it is expected to chart the path towards becoming the new normal.
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