Co-working spaces attract bigger companies looking to save cost
Co-working spaces can save around 20-25% of real estate costs, says JLL India report
Mumbai: Co-working spaces, so far popular with start-ups and entrepreneurs, are increasingly attracting larger companies as well, as mobile work forces and cost savings encourage many organizations to try out new ways of work. According to office solutions providers and consultants, many companies are going for flexible shared office spaces with no long-term leases and without any fixed capital investment. Co-working spaces can save around 20-25% of real estate costs, says a 7 July report by property consultant JLL India.
Media company Discovery Communications, Inc. has booked around 150 seats at an upcoming shared office premises from WeWork at Mumbai’s Bandra Kurla Complex (BKC), two people aware of the development said, on the condition of anonymity. In January, WeWork, a US-based co-working space provider, leased the entire 16-storey ENAM Sambhav tower in BKC and plans to start offering office spaces with 2,000 seats starting September. A Discovery Communications spokesperson did not respond to email queries on the development.
WeWork’s India lead Juggy Marwaha declined to comment on the deal, but said that many large firms increasingly prefer shared work spaces due to the limited availability of quality offices in prime locations and also “to understand and incorporate start-up culture into their organisations.” “We are in a scenario where good quality spaces are not available in the market. Vacancy levels are down in almost every market. Co-working spaces offer a good solution not only to start-ups and freelancers but also to large enterprises for short-term requirements like 12-18 months,” said Marwaha.
In July, WeWork opened its first centre in Bengaluru with 2,300 seats, of which 90% has already been occupied. Two more centres in Bengaluru are in the pipeline, he said. The company has also leased an entire four-storey commercial property at Andheri, which previously housed the headquarters of broadcaster Star TV India, to set up its second co-working office in Mumbai. Marwaha said the new place would start operation by December this year and would have around 800 seats.
Sumit Lakhani, chief marketing officer of co-working services provider Awfis Space Solutions, agreed that many large firms are finding such spaces cost effective. Awfis, which started operations in 2015, operates in 30 centres with total seat of around 10,000 seats. “One of the things that we have seen is that companies do prefer to have their own headquarters where they don’t mind investing in resources and managing the whole space. However, with respect to offices across various other cities, they prefer to take co-working offices,” he said. In the last two years, several big and mid-sized firms have used co-working spaces particularly for their sales force and other mobile staff. In late 2015, apparel firm Pepe Jeans took around six seats at one of the centres run by Awfis in Benguluru. Since then, it has made the space its South India regional office. It also plans to take up few seats at one of the upcoming Awfis centres in Kolkata and turn it into a branch office for the eastern region. This month, Awfis also leased over 23000 sq.ft in Crescenzo, a commercial office building in BKC, Lakhani said.
“Our sales forces are spread across the country and for that, we don’t need a big office. Taking up a co-working space is cost-effective for us. Secondly, leasing an office comes with the additional headache of maintaining the place, additional manpower, deposits, registrations etc.,” said Suvojit Mukherjee, regional manager (South India), Pepe Jeans Ltd, adding he is able to save around Rs 20-25,000 every month as compared to leasing space at a prime office building in Bengaluru.
Gurugram-based food tech company Zomato said two of its teams of 20 each in Mumbai and Kolkata operate out of co-working centres run by Awfis.
“Co-working spaces come with a plug-and-play set-up and offer most amenities that a functional office needs, and the overhead of lease lock-ins, and furnishing etc is also lower since we have smaller teams working out of these spaces,” a Zomato spokesperson said in an email response.
According to Vikas Lakhani, co-founder of Gurugram-based Instaoffice Business Solutions Pvt. Ltd, nearly half of all desks are vacant in large offices and most spaces are underutilised. “Now, they have started to realise this. With co-working spaces, you only pay for what you are using. So, you end up saving a lot of the overall cost of operation, ”he said. Amazon India, Yahoo and Dr. Reddy’s Laboratories, are among companies which have taken space at his Instaoffice spaces, he added.