Co-work­ing boom fu­els con­sol­i­da­tion con­cerns

HT Estates - - FRONT PAGE - Mad­hurima Nandy and Bidya Sa­pam mad­hurima.n@htlive.com

BENGALURU/MUM­BAI: Co-work­ing spa­ces in In­dia are be­com­ing crowded with at least 350 op­er­a­tors vy­ing for clients, lead­ing to fears that a con­sol­i­da­tion will lead to the shut­ter­ing of many com­pa­nies.

Shared of­fice spa­ces are still com­ing up, but ac­cord­ing to ex­perts, a hand­ful of large op­er­a­tors will scale up across the coun­try and edge out smaller firms.

Theco-work­ing­sec­tor took up 13% of the to­tal trans­acted of­fice space be­tween Jan­uary and June, as ac­tiv­ity-based work­ing and com­mu­nity spa­ces be­come the norm for mod­ern day of­fice oc­cu­piers seek­ing a col­lab­o­ra­tive ecosys­tem, said a Knight Frank In­dia re­port.

Ab­hishek Goenka, chief fi­nan­cial of­fi­cer, at Ben­galu­rubased Cowrks, said, from the cur­rent lev­els, in five years, 40-50% of all new leas­ing of of­fice space would be by co-work­ing firms. “But build­ing co-work­ing spa­ces is not easy, and in­volves de­sign, tech­nol­ogy, com­mu­nity build­ing and cus­tomer ser­vice. Con­sol­i­da­tion is im­mi­nent be­cause the model works on build­ing scale, and that’s the key way for the busi­ness to grow.” Cowrks, a unit of realty firm RMZ Corp., has 14,000 seats and plans to dou­ble that by March 2019.

“A ma­jor num­ber of play­ers came in last year. But most have also shut shop. A lot of peo­ple thought it would be an easy busi­ness to be in, but it is not. It needs a strong back­bone to scale up and smaller play­ers don’t have the band­width for that,” said Harsh Lam­bah, coun­try head (In­dia), In­ter­na­tional Work­place Group (IWG). IWG cur­rently op­er­ates 120 shared of­fices, of which 114 are busi­ness cen­tres un­der the ‘Re­gus’ brand, and six are co-work­ing of­fices un­der the ‘Spa­ces’ brand. The plan is to dou­ble the net­work over 36-48 months. Lam­bah­sayscon­sol­ida- tion will hap­pen through ac­qui­si­tions by a larger firm, as play­ers start ex­it­ing be­cause they are un­able to sus­tain.

Karan Vir­wani, In­dia head, WeWork, agrees, ad­ding that con­sol­i­da­tion will be trig­gered by var­i­ous fac­tors. “This is a cap­i­tal-in­ten­sive busi­ness and is cus­tomer-cen­tric. Ev­ery­one thinks it’s glam­orous, but as an op­er­a­tor, it’s not easy. There is re­tail and hos­pi­tal­ity at its core and there are no rules how it should be done, so one is try­ing new things, some of which may not work.”

Flex­i­bil­ity to scale up and down, ease of trans­ac­tion, no has­sle of fit-outs or deal­ing with mul­ti­ple ven­dors, and re­duced le­gal and com­pli­ance risks, are some of the fac­tors that have worked in favour of co-work­ing spa­ces. Bengaluru is the largest mar­ket for flex­i­ble workspace in In­dia and has the largest share of tech­nol­ogy start-ups, says a Col­liers In­ter­na­tional re­port.

Vi­ral De­sai, na­tional di­rec­toroc­cu­pier so­lu­tions group, Knight Frank In­dia, says with so much com­pe­ti­tion, scale, fi­nan­cial abil­ity and cus­tomer ser­vice will re­ally sep­a­rate the se­ri­ous op­er­a­tors.

In­dia’s tra­di­tional of­fice sec­tor has wit­nessed con­sol­i­da­tion in re­cent years, where a hand­ful of 5-6 de­vel­op­ers con­trol the ma­jor­ity of the mar­ket. Co-work­ing could fol­low the same steps.

“Not just start-ups, de­mand for shared of­fice space is also com­ing from large com­pa­nies. The big­gest chal­lenge for op­er­a­tors is to have a scal­able model. One needs to un­der­stand how to pro­vide the right cus­tomer ex­pe­ri­ence and stan­dard­ize the ex­pe­ri­ence,” said Nitesh Sarda, founder, Smart­Works, ad­ding that while many mom-and-pop co-work­ing of­fices are com­ing up, one needs to have a brand to make it big and sus­tain­able.

CO­WORK­ING IS A CUS­TOMER­CEN­TRIC BUSI­NESS

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.