With more and more companies returning to the office, coworking spaces are experiencing steady demand. According to players in the sector, even big companies are now looking for shared office spaces for greater flexibility.
Santosh Martin, the chief financial officer of WeWork India, said that large enterprises now occupy 70% of their space, with the remaining 30% for startups and small and medium-sized companies. Before the pandemic, 50% or fewer desks were occupied by large enterprises. The downturn in startup funding has also impacted that market’s demand.
WeWork, the world’s largest co-working space provider, operates in all the major Indian cities, including Bengaluru, Gurugram, Hyderabad, Mumbai, and Pune. According to Bengaluru-based 315WorkAvenue, demand from multinational corporations for IT, engineering, financial services, and R&D has doubled in the past year. According to Manas Mehrotra, the founder of the coworking space provider, MNCs, and corporate houses often had standalone offices and were reluctant to lease coworking spaces. But that, he says, has changed drastically now.
“They want coworking offices due to reduced capital expenditure budgets, as also the customised workspace design and enhanced flexibility that coworking spaces provide,” he said.
Large enterprises that have taken coworking spaces include Google, which recently leased 1 lakh sq ft from service provider Smartworks in Pune, as well as Amazon and Accenture, who have taken up spaces in coworking spaces in smaller cities like Bhopal and Vijayawada.
According to Viral Desai, senior executive director at the real estate consultant Knight Frank India, the percentage of coworking spaces in the country that large corporations occupy is almost 80%. He claimed that smaller companies dominated the segment before the pandemic.
He said this situation is more prevalent in Bengaluru and Hyderabad, where companies still operate the hybrid model, compared to other cities like Mumbai, where most companies have mandated that all employees work from the office.
“Companies are now more comfortable signing contracts for two to five years to use such flexible spaces. They are leasing offices even in smaller cities like Jaipur. Suddenly if one day, a client says they do not want people to work from that location, it would be easier to wind up that establishment,” Desai said.
He said corporates are now signing multi-city contracts that would commit to using a certain number of seats across three or four cities instead of signing up for a particular number in each of these cities. According to Anshuman Magazine, chairman and CEO for India, South-East Asia, the Middle East, and Africa at the property consulting firm CBRE, companies will continue considering such spaces as a hedge against headcount uncertainty. These spaces have shorter lease durations and more flexible lease terms.