The startup ecosphere has been continuously growing in India’s major cities and despite the occasional lull, the various global giants in the office space industry have remarkably shown considerable interest in the co-working segment. A large number of startups are now hoping to reduce the operating costs of owning or renting exclusive office space. This reduction in operating expenses allows new companies to invest more funds in the core business, such as increasing production or retaining talented employees by offering them the desirable higher salary packages. Coworking spaces have become very popular due to the pay-per-use model with reasonable and defined rates for the set of services offered.
In addition, these shared office spaces have certain unique amenities such as a food court, babysitting services, play areas, spa, gym, sleeping pods, etc. All these additional conveniences have made these offices even more popular. All of these conveniences greatly boost staff morale, which eventually improves productivity. The presence of crèches staffed by trained staff also brings great relief to working couples who can concentrate well on their work without compromising their parenting responsibilities. The office spaces also have a great vibe with great aesthetics and interior design. These factors create an uncluttered and relaxed environment in these office spaces that alleviate the work stress often experienced by professionals.
Trends in coworking spaces expected in 2018
These shared office spaces offer a great deal of cost savings, which is also combined with the ability to network with other entrepreneurs operating from the same workspace to achieve certain common goals. Therefore, these shared offices are undoubtedly here to stay and evolve in 2018. Regardless of the high potential that these shared office spaces have, there are also certain factors that can become obstacles in their rapid expansion. These factors include the following:
• Stakeholder orthodox attitude: There are few owners who are not able to fully understand the concept of coworking and are often wary of leasing real estate assets to coworking operators. Due to the lack of proper awareness, they feel it is safer to rent their properties to traditional companies. Furthermore, this has witnessed that India has certain flaws in the legal system which acts prove to be a deterrent for co-working space operators to opt for court battles against land owners.
• Exclusivity Agreements: Under the exclusivity agreement, only one coworking operator can be accommodated in a specific building. This leads to a non-optimal use of space. Thus, a limitation is exerted on the growth potential of the coworking space industry.
Despite the above hurdles that are prevailing today, industry experts forecast that the future of coworking will be very bright after witnessing the increase in demand for coworking offices.
Future growth expectations for coworking offices
Joint venture operating companies are the most popular startups in India, receiving millions of investments from top investors. Work culture is gradually evolving with the increasing adoption of coworking spaces. There is an average 85% occupancy rate of coworking spaces available in India today. This has shown that a minimum of 20-25% of operational costs can be saved by adopting co-working spaces. Sometimes it is even higher depending on the nature of your business.
Experts are of the opinion that co-working is going to be a mainstream trend in India and this is sure not just a fleeting style that is likely to fade away like mullets and flared jeans. Based on observations, various experts predict that India offers fertile ground for the immense growth of co-working spaces. The reasons behind the high demands for coworking spaces are the flourishing ecosystem of startups and the large list of flexibility attached to coworking spaces.
Big investments are already in
India has witnessed the demand for co-working spaces not only from startups and freelancers, but also from major business conglomerates and corporations. The expected funding in co-working space provider companies is expected to be $400 million in 2018. 70% of the business opportunity is expected to come from large corporations.
Crucial Statistics Related to the Indian Coworking Phenomenon
Delhi, Mumbai and Bangalore are the cities that are already experiencing rapid growth when it comes to the demand for coworking spaces. The expectation is that there will be around 400 shared offices in India by the end of 2020.
In 2018, industry experts predict that there will be an increase in exclusivity deals. This would mean that there would only be one coworking space in a single building. This is proving to temporarily dampen the market for coworking operators and also lead to sub-optimal use of amenities and space. There are big players like Cox & Kings, Sequoia and Paytm that have already invested in the coworking space market and may therefore face a temporary setback in 2018.
Industry experts predict that coworking spaces will soon do away with lease-based models that have certain restrictions attached to them. They are likely to implement a unique ownership model that offers even more flexibility at an even lower price. Demand for coworking spaces is skyrocketing today and this is a sign that future growth in coworking spaces is obviously at stake.
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