Decoding rise of Co-Working Spaces in India

History

Coworking is by all accounts a standard piece of life for the individuals who freelance, work distantly, or run new businesses today, yet this was not generally the situation. The tale of coworking started in 2005, and it has advanced significantly from that point forward. Programmer Brad Neuberg is credited with beginning the coworking marvel from a San Francisco aggregate space. As point by point in a blog entry by Neuberg himself, the tale of coworking is not the same as the one you would have effectively heard.

Neuberg previously imagined a coworking space in 2005, when he was going through tough financial times. He was working at a startup, yet felt clashed—he needed to figure out how to consolidate the sensation of autonomy and opportunity of working without anyone else with the local area feel and design of working with others. Neuberg worked with a holistic mentor and made a three-section plan that included making another kind of room that delivered that structure and community feel he wanted. At this time, coworking as far as we might be concerned today was considered.

As per Neuberg, the absolute first coworking space to exist was San Francisco Coworking Space, situated in the dividers of Spiral Muse, a women's activist group. Neuberg had companions at Spiral Muse and referenced his coworking thought to one of them, Elana Auerbach. She consented to allow him to utilize the space at Spiral Muse double seven days for an aggregate of $300 every month, acquiring any benefits past that for himself. With Neuberg's father giving the initial not many months' lease for the space, the San Francisco Coworking Space formally opened. The principal official collaborator was Ray Baxter, a startup engineer, competitor, and father. After about a year, Neuberg migrated from the little Spiral Muse to the Hat Factory, the world's first full-time coworking space, out of overpowering interest for his idea. Not long after Neuberg started the pattern, the remainder of the nation paid heed. New York City's first coworking space, Brooklyn Coworking, opened up in 2006. Jam, which urged remote workers to get together in one space, was additionally established that year and extended to urban communities like Austin and Phoenix in 2007. In 2009, the Global Coworking Unconference Conference was set up, and is today still an expert in the coworking business. By 2012, there were more than 2,000 spaces on the planet, establishing its force as a worldwide pattern.

As of 2019, there are many major coworking space organizations around the globe, remembering establishments with branches for various urban communities. While large organizations like Impact Hub, WeWork, and Industrious overwhelm the worldwide market, a wonderful measure of free organizations are rapidly scaling to the scope of 5 to 10 areas, ruling piece of the pie in specific urban communities and districts. Other, one-off areas are likewise opening, driving the business' proceeded with development.

Working autonomously, however together — that is the mantra of coworking spaces. Employees working at these spaces don't need to lose numerous hours of their day in the day by day drive, yet need not feel secluded working remotely from home. The idea of shared spaces is the best usage of tech instruments accessible today with the organizations to guarantee workers stay associated with the group while additionally offering adaptability. 

Impact on India's Work Culture

Coworking spaces are a gift for startups also. India has the third-biggest startup biological system after China and the US with in excess of 5,200 startups. Be that as it may, alongside the startup transformation, land costs are additionally soaring each year. This is the place where coworking spaces come into the image.

Opting for Co-working spaces, at least at the nascent stage, helps startups to cut down on investment and direct the budget towards hiring the right people. Interestingly, employees also stay socially integrated as they are surrounded by like-minded people with whom they can share and discuss ideas. From 4% during the first three-quarters of 2017 to 10% till Q318, the share of the coworking sector in total office leasing in India shows growth of flexible working space is on steroids, says an ET report.

Adaptable work environments (coworking and business focuses) in India are developing at a quick speed, with flexi administrators renting the most noteworthy at any point measure of offers in 2018. Renting by flexi working environment administrators crossed 7,000,000 square feet during 2018 as indicated by Colliers International, representing 14% of the all out renting during the year.

“Bengaluru accounted for the highest share of leasing by flexi operators, followed by Mumbai and Delhi-NCR. Demand for flexi workplaces centers in India was first led by startups, before MNCs and large enterprises took the plunge by taking up space in coworking workspaces,” says Vineet Anand, Director of Office Services at Colliers International India.

There are, indeed, various variables driving the flex work environment space. Millennials, who as of now address almost 46% of India's labor force, will impact the working society as India's gig economy accumulates steam. India has more than 5,200 startups, fortifying its situation as the third-biggest startup environment after China and the U.S., and, in this manner, startups are probably going to keep on taking up seats in shared work environments. Curiously, undertakings are settling on these spaces due to their adaptability, just as more prominent straightforwardness in setting up workplaces without numerous managerial problems.

The mutually advantageous arrangement for the two workers and organizations has made ready to the mushrooming of coworking spaces in India. The idea, which is digging in for the long haul, has pulled in the consideration of numerous in India super quick. Specialists feel not all players may maintain, but rather the idea doubtlessly has entered the nation over, including level 2 and 3 urban areas and India is very nearly a trendy working space insurgency.

While most of these spaces are run by major players such as WeWork, 91springboard, Innov8, Cowrks, and Awfis, local players such as SproutBox, myHQ, AltF CoWorking, GoHive, GoWork, Yessworks, and Ideashacks are also trying to cash in on the demand for such workspaces from budding entrepreneurs.

“We foresee large enterprises gaining further exposure to flexi spaces by adopting a strategy of core + flexi, wherein they maintain traditional offices, but also take up space/seats in coworking centers. A growing number of companies will continue to base some teams out of shared workspaces as they enter newer markets or set up new teams,” says Anand.

Given that coworking spaces in India are in a nascent phase of growth, the failure of a pioneer will weigh on investor sentiment in the short-term, say industry experts. “WeWork has 26 coworking spaces operating in India and if the global giant undergoes a hit, it will definitely impact the valuations and fund-raising plans of coworking players,” said Sanjay Choudhary, CEO and founder of Incuspaze, a Gurugram-based coworking space.

Others agree. “The current uncertainty might affect investor sentiment and have some impact on funding. However, we anticipate this to be a short-term effect,” said Amit Ramani, founder and CEO at New Delhi-based coworking space and virtual offices solution provider, Awfis.

Investors tightening their purse strings in the wake of WeWork’s debacle could also spur consolidation in India’s coworking space. “In 2018, One Co.Work acquired IShareSpace and AltF CoWorkingwent pocketed Daftar India. This acquisition trend will continue,” said Shobhit Agarwal, managing director and CEO of Anarock Capital, a Gurugram-based real estate services company.

WeWork's continuous inconveniences fill in as an unmistakable update for organizations to adhere to the fundamentals, recognize driving coworking major parts in India. It is a great example of how a business should operate.

“Sustainability is the key to survival,” said Choudhary of Incuspaze. “Funds are important for startups to advance their business. But it’s imperative to ensure that the process of fundraising is for the growth of the business and not for its survival.”

With the millennial workforce evolving, over 13 million people are expected to work out of coworking centres by 2020 in India. Many corporate firms are expected to allocate 10% of their office portfolio to agile workspaces, according to JLL India.

“We at Awfis, have a strong expansion plan for the next three years along with a robust capital base to support it. We intend to go for an IPO in 2022,” said Ramani of Awfis.

From 30,000 coworking seats in 2019, the organization is hoping to arrive at 200,000 seats in the following three years. For extension, Awfis is banking upon interest for coworking space coming from level 2 urban communities. A year ago, it opened a coworking office in Chandigarh and expects to venture into urban areas like Jaipur, Ahmedabad, Bhubaneshwar, Kochi and Indore, by 2020.

In the interim, Incuspaze, what began activities in 2017 is taking advantage of developing startup culture and rising interest from global organizations (MNCs), which are quick to get to adaptable work environments in level 2 and level 3 urban communities.

“MNCs are keen on shifting their base to coworking spaces in search of easy access to fully managed workplaces that help them save money, provide employees flexibility of location and time,” said Choudhary of Incuspaze. The company currently has coworking assets in Gurugram, Delhi, Mumbai, Kochi, Lucknow, and Indore. It has additional coworking capacity coming up in Hyderabad, Thiruvananthapuram, Bengaluru, Jaipur, Pune, and Coimbatore.

Like her peers, Gupta of ABL Workspaces, too, is optimistic about future expansion as she sees bad news coming from WeWork akin to temporary speed breakers. Her company at present operates 3,000 coworking seats in Delhi and plans to reach 15,000-plus seats by next year.

“The market is expanding because firms big or small are realising that coworking is in a way promoting sustainability, which is the need of the hour. Shared use of workplace, natural resources is the new future,” she said.

Growth Prospects and Future Trends

Flexible workplace operator companies are transforming into managed space operators, wherein they are offer the entire center to a single tenant looking for quality space with some flexibility. This trend will continue in the future, too.

Along with the top three cities of Bengaluru, NCR, and Mumbai, operators are likely to expand rapidly in Hyderabad, Chennai, and Pune.

Post the current expansion stage, which is likely to last for two to three years at least, experts foresee consolidation in the market through mergers and stake purchase by institutional investors.

Shouvik Mandal, CEO of Apeejay Real Estate, says, “The coworking space model is increasingly becoming popular in India. To cash in on this opportunity, big players from the realty sector are also turning their focus to it. Our company, for instance, is already providing its services in the big cities of the country to cater to the needs of business enterprises. We have opened Apeejay Business Centers in Chennai, Gururgram, Kolkata, Mumbai, Navi Mumbai, and Pune. We are providing shared serviced office spaces to more than 100 big companies, medium-scale organizations and start-ups to expand their business.”

Avanta India is another real estate company that offers coworking space in Delhi and Gurgoan across the entirety of its business communities. The organization presently possesses four business places in New Delhi and one in Gurgaon, offering office answers for organizations, everything being equal.

Nakul Mathur, MD, Avanta India, says, “This business model is growing in India over the last few years at a steady rate, but now it has picked up pace with the mindset of people changing towards sharing the spaces. It has more to do with the cost of having a separate office in case of small and medium companies and saving time in case of bigger companies. By 2025, it is expected that around 42% of the population in India will work in urban centers and hence the demand for office space will increase manifold. With economics playing on the mind of many new businesses, the demand for shared office space will grow tremendously in the next decade.”

Amit Raheja, CMD, Wealth Clinic, says, “Having ‘Uber Cool’ office is the dream of every company, but the amount of time and money it requires is not everyone’s cup of tea. Here the coworking spaces come into the picture. Initially, in India we had coworking spaces with only the start-ups in mind, but now well developed and luxury office spaces have also become a trend. A paradigm shift in the coworking industry is on the anvil as an era of flexible office spaces is here to stay. The industry is expected to grow by 40 to 50% by the end of this year itself.”