Co-working space makes room for more

Awfis and Quest Offices, two coworking space providers, have recently taken on lease large office properties in the Bandra Kurla Complex area of Mumbai, according to sources.

In January, Wework, the global leader in co-working, had taken on lease 190,000 sq ft in the Sambhav building in Bandra Kurla Complex.

Awfis leased 23,648 sq ft in Crescenzo, a commercial office building, in the first week of August. It will pay the higher of the minimum guaranteed initial rent of ~125 per sq ft per month or 42 per cent revenue share to landlord DKJ Shelters.

Awfis negotiated a threemonth rent-free period in the 60-month lease term. The rent will rise by 9.6 per cent to ~137 per sq ft per month after one year. Additionally, the tenant would pay common area maintenance charges, currently estimated at ~10 per sq ft, sources said. The space is expected to be operational by November 2017. A mail sent to Awfis did not draw any response.

In another transaction in July, Quest Offices relocated from the first floor in Crescenzo building to the eighth. It has leased 13,469 sq ft at an initial bare-shell rent of ~152 per sq ft for a period of five years.

The landlord will do fit-outs of the premises for which Quest Offices will pay an additional fit-out rent of ~30 per sq ft per month for the entire lease term. Quest Offices could not be reached for comments.

According to commercial property data analytics firm CRE MATRIX, 1.5 million sq ft leased space has been occupied by co-working office providers in Indian metros over the last two years.

It expects the co-working industry to pick up in the future with initial interest in prime office precincts such as BKC, Andheri and Powai in Mumbai; Connaught Place and Okhla in Delhi; and Koramangala and Whitefield in Bengaluru.

Co-working spaces in the country were set to grow by 50 per cent to over 1 million sq ft by the end of the year, property consultant JLL said.

“Co-working is expected to receive $400 million in investments by 2018 and is set to grow by 40-50 per cent to reach over 1 million sq ft of leased ‘alternative’ work spaces by the end of the year in India,” said Ramesh Nair, country head at JLL India.

There are about 300 coworking operators in the country operating less than 1,000 centers, of which less than 100 are branded spaces.

“The potential market size for the co-working segment is 12-16 million seats. Demand for co-working spaces is no longer limited to freelancers and startups. Small emerging businesses as well as large corporate offices are looking at co-working spaces to maximise their productivity,” Nair said.

With office rental costs continuing to rise in India’s business districts, the total space leased by co-working operators in the top cities could potentially stand at 7-9 million sq ft by 2020. Co-working spaces can lead to a 20-25 per cent cost saving.