Co-working space to see 3-fold rise in demand by 2020
From operating out of one of the founders' home, Gurugram-based NGO consulting start-up Impactify has settled down at one of the co-working properties run by GoWork. Impactify's Founding Partner Sudeep Gupta feels the decision has not only brought the start-up's overheads down but also helped it scale its team up or down as the need arose.
“We have seen ourselves scaling down to a team of seven to scaling up to 12 and are now steady as a 10-member team. This is the flexibility that GoWork offers, along with providing a corporate-like space that helps us attract better talent," says Gupta, one of the 28 clients that GoWork, a co-working space provider, serves even as it clocks a 37 per cent month-over-month growth in occupancy rates.
GoWork is only of the nearly 200 co-working players running an estimated 400 shared workspaces within the office space transactions. Real estate consulting firms such as Knight Frank estimate that the demand for co-working sector is set to triple by 2020.
As per a recent first half (H1) of calendar 2018 report, Knight Frank found the co-working sector took up a significant 32 per cent of the space transacted by the other services sector or 13 per cent of the total space transacted during H1 2018.
“The segment is expected to grow at an annual rate of almost 30-40 per cent," says Anuj Puri, chairman of ANAROCK Property Consultants. Many players have aggressive plans to expand in the Indian coworking space and include WeWork, InstaOffice, One CoWork, The Hive and Skootr Global, he says.
According to Knight Frank, the share of the 'Other Services' sector has been consistently growing and has eclipsed that of the IT/ITeS sector during H1 2018 by taking up 40 per cent of the in the recently concluded period on the back of increased take up by e-commerce and coworking companies.
“Recent market interactions indicate that few leading commercial developers are reinventing themselves and apportioning nearly 60-70 per cent of their future development potential on creating co-working environments and millennialfriendly workspaces. Going forward, co-working as a subsector will attract a major chunk of upcoming supply over traditional office formats," Knight Frank's recent H1 report stated.
From an annual average of three million sq ft available currently, coworking space is set to scale up to 11 million sq ft by 2021, says Sudeep Singh, chief evangelist and CEO at GoWork. Offering one of the cheapest rates at ~9,500 per seat, GoWork is banking on the growing demand to ramp up its operations to cities like Mumbai, Hyderabad and Bengaluru, even as it looks to end the calendar year 2018 with an occupancy rate of 55 per cent from the current 33 per cent from its existing two properties in Gurugram.
Similarly, from managing merely two seats two years ago to 3,000 today, the 100 per cent bootstrapped AltF CoWorking is looking to ramp up to 10,000 seats through its leased and sub-leased model of co-working services.
According to Sarthak Chhabra, co-founder and director at AltF CoWorking, the expansion plans are backed by not only funds that the co-working player is planning to raise but also gross profit margins in the range of 25-30 per cent.
Meanwhile, the space is also attracting private equity attention, from Sequoia Capital investing $20 million in mid-2017 in co-working space start-up, Awfis, as per Knight Frank, to GoWork looking to raise $200 million from Indian, Chinese or Japanese PEs.