With multinationals expanding operations, growing urban population and office absorption in critical metropolitan areas reaching record levels, commercial real estate in India are looking good. Amid all the good news is one particular trend which is prominent: the arrival of co-working space. The pattern is red hot and has caught the attention of investors. If the commercial real estate is moving at a brisk speed, then it is safe to say the co-working trend is jumping leaps and bounds. Being a relatively newer trend, the emerging trend offers opportunities to prosper to everyone entering this segment. The solid fundamentals of substantial economic and practical benefits for customers make this a highly viable model with excellent prospects of scaling.
Co-working spaced are built on a plug-and-play concept. These are also known as flexible workspaces or shared offices which typically feature desks, communal tables, conference rooms along with amenities such as Wi-Fi, scanners and printers, common pantry and washrooms, power back up, shared reception and security. This model is particularly appealing to freelancers and start-ups that yearn to work from a professional space but do not want to incur massive fixed costs tied up in rentals. Small and medium-sized firms also a well-represented customer base.
Co-working spaces present an opportunity for consumers to bypass the significant investment cost of equipment, insurance, utilities and also gives them freedom from large rental deposits and long lock-in periods. Users have the choice of renting out the exact space they need at present and can further take on more space as their need grows. A shared office customer can be crisply efficient and pays only for the immediate requirement and not a foot extra.
Setting up an office in India can be quite a cumbersome process especially for newcomers. A typical “office space” in India requires the tenants to shoulder the costs of plumbing installations, floorings, paints and so on. These escalate the cost and disturb the already tight budget of customers. Further to this, setting up an office requires managerial costs which involve tasks such as identifying and supervising contractors, establishing utility services, design selections, and enforcing timelines. Thus, setting up an office can take a lot of time and effort and diverts the attention of the consumer from the core business imperatives. Apart from this, maintenance and administration further drain out the resources. Shared office spaces enable customers to skip this entire category of financial and managerial expense and instead focus on the activities that will grow their businesses.
Advocates of shared spaces state that cost savings and physical convenience are only a part of the equation. The other more significant part according to them is the sense of community and support that these places offer. Traditional workspaces go the extra mile for the professional development of their employees through efforts like mingling events, guest lectures, workshops for skill developments and mentorship programs. At their most effective, co-working spaces are less about renting out a desk and more about being part of an ecosystem of the enterprise.
The investment rationale is relatively simple to understand considering the limited supply and growth prospects of this segment. Opportunities in the co-working market are more accessible for institutional investors to absorb as against individual investors. Getting a jumpstart to this nascent trend in Indian landscape can invest go the distance.