It’s game on! Co-working operators gun for the big corporates.
As the fight over the future of workspace rages on, there’s one disruption which is becoming clear. What started out as an easy, not-so-expensive co-working solution for start-ups and individual workers is now moving into the big men’s territory. Co-working operators are gunning for a different set of clientele altogether. They are no longer focusing on freelancers and consultants, or even start-ups as their chief business drivers.
The pandemic has made their pitch an easier sell to big corporates looking for shorter leases and more flexible options. In August 2020, WeWork India CEO made a strong statement that going forward, they will focus on enterprise clients. Last month, news had it that Smartworks has taken over 2 lakh sq. ft area each in Mumbai, Pune and Hyderabad on lease since March 2020, to set up three new large co-working centres, specifically targeting big corporates. Rishi Das, co-founder of IndiQube, in an interview to the media has said the initial 15-20% dip in demand for co-working spaces post COVID-19 is beginning to get offset by larger companies looking for cheaper locations.
Here’s a breakdown of what’s driving corporates, who are often known to create signature offices of their own, towards co-working solutions? And what’s the big gain for co-working operators?
Minimised risk
This is the biggest driving factor for operators to seek out big corporates. Even if corporates manage to wrangle a mean bargain and the operators have to settle for lower e rent, the risk of having small or individual occupants, who may or may not be able to pay rent, or who might just up and leave after a short-term lease, are high in the post pandemic world. WeWork, for example, is actively seeking out clients with more than 1,000 employees and their current user base includes names like Starbucks, Microsoft, Salesforce and Facebook, among others. The reason, as their new CEO, Sandeep Mathrani, says, is that large corporates hit by the novel coronavirus are looking to trim the workforce, reduce cash burn and conserve cash.
Consistent income
Co-working biggie Smartworks, which raised a funding round of Rs 175 crore last October, has recently acquired over 6lakh sq. ft of office space on lease in Mumbai, Pune and Hyderabad. The company plans to expand aggressively. Co-founder Harsh Binani says they are looking at profitability mostly by focusing on large corporates that take around 250-300 seats on an average. At a time when most individual workers are struggling to get over the pandemic setback, and have let go of co-working leases operators are looking at filling vacant seats in bulk via corporates to keep up a consistent income flow. This works perfectly for corporates who now need flexible workspaces in the post-COVID-19 era, and yet want to avoid capital expenditure of re-doing offices.
Corporates bring robust business
For most co-working operators struggling to stay in business after being left high and dry by individual occupants who vacated during the pandemic, corporates getting into the game is a saviour. Big brands like IBM, UBS, etc., have decentralised their traditional offices, and to fight work from home fatigue of their employees, are looking at innovative co-working spaces as a hub and spoke model. This brings new opportunities for the co-working space market looking to expand its enterprise customer base to keep up a robust occupancy supply chain. As Arjjun Chander, founder of the Chennai-based Karya Spaces, which has now opened a new centre in Nungambakkam, said in an interview to The Hindu, recently, “Looking to cut down costs, they have changed their plans of getting their own office and are using our spaces instead – we are getting nearly 100 queries every month.”
Managed office spaces - a big draw
While start-ups have vacated co-working offices and begun to work remotely to cut costs, corporates have begun to rent co-working spaces – also to cut costs and facilitate flexible working for their employees. But they seek innovation – instead of providing mere desks, can these spaces give them ‘managed office spaces’? A large space that can also include customised office design and furniture end to end hospitality and services, technology support for productivity and social distancing is where the future of co-working spaces is heading.
So, what will the future be?
At the moment – things look quite bright for managed co-working sector. ‘People’ centric well designed, safe offices will see a resurgence in demand. Corporates want a relaxed atmosphere that can up employee productivity and at the same time, access new talent and ideas.
For more, read
1.Corporate Coworking: Why Large Corporations Are Turning To Flexible Offices
2.Smartworks takes over 6 lakh sq ft office space on lease in Mumbai, Pune, Hyderabad
3.The future of Indian co-working spaces in 2020
https://www.thehindu.com/life-and-style/future-of-indian-co-working-spaces/article31906001.ece
4.Demand for coworking spaces drops
Architect, Valuer, Visiting Professor
4 年Great sr. Thanks.