Coworking spaces are becoming increasingly popular among businesses in India, where demand has doubled in the last four years. A tremendous rise from 14% in Q1 2019 to 27% in Q1 2023, coworking spaces comprised a large portion of the 8.2 million sq ft of net absorption across the top seven cities.
In Q1 2023, Bengaluru and the National Capital Region (NCR) accounted for two-thirds of net coworking absorption, while Pune and Chennai absorbed roughly 0.52 million sq ft of coworking space. The top seven cities saw a 90% increase in net absorption of coworking spaces, increasing from 1.3 million sq ft in Q1 2019 to over 2.18 million sq ft in Q1 2023.
Following the pandemic, many companies, especially those in the IT and ITeS sectors, have chosen flexible workspaces over traditional offices. The appealing feature of coworking spaces is their variety of locations, such as residential areas, malls, and hotels, as well as their affordability compared to traditional offices with lengthy lock-in periods.
Low vacancy levels in Grade A offices have driven demand for coworking spaces in cities like Bengaluru, Chennai, and Pune. In contrast, in the Delhi-NCR region, low vacancy rates in commercial space have also fueled growth for coworking setups in areas like Gurugram and Noida.
“Coworking spaces demand weakened considerably after Covid-19 disrupted the workplaces equation across the country. We’re seeing a decisive reversal of this negative trend now, with coworking particularly attractive because of the disrupted IT/ITeS employment scenario,” said Utkarsh Kawatra, Senior Director – myHQ (ANAROCK Group).
The first quarter of 2023 witnessed a net office absorption of over 4.6 million sq ft in the southern cities of Bengaluru, Hyderabad, and Chennai, with coworking firms accounting for 26%. Coworking companies accounted for 24% of the net office space absorption in the Western markets of Mumbai Metropolitan Region and Pune, around 1.48 million sq ft. In Kolkata, coworking players accounted for 12% of the 0.25 million sq. ft. of office space consumed in Q1 2023. Coworking players made for 32% of the approximately 1.89 million sq. ft. of office spaces absorbed in NCR.