As businesses and corporates are reassessing space requirements and flexible office options in the aftermath of the coronavirus outbreak, the activity in the co-working segment is expected to gain momentum in 2021. As per Collaborative Space in Dynamic World Order report by Savills India, leasing by co-working operators is expected to increase by 42 percent in 2021 at 4.9 million sq ft over 2020.
Co-working model of office space has gained huge popularity in the past few years. The segment in India has grown from a 5 percent share in 2016-17 to about 15 percent in 2019. The pandemic has hit this segment badly since most of the small firms, startups and entrepreneurs calling off their contracts, thereby badly affecting the growth trajectory in 2020. However, it won’t be a steep slope for the co-working segment as it is still expected to contribute around 10 percent of the overall leasing activity in 2021 and 2022.
The share of the co-working segment might have gone down in 2020 with 11 percent share of the office leasing market. However, the coming year is expected to even out the dip bring the leasing activity comparable to pre-pandemic times. The report mentions that the share of co-working space take-up in overall office leasing activity is poised to rebound to a 15 percent share in 2021, similar to the 2019 level.
The report also mentions that over 3,000 co-working centres across the country are likely to offer approximately 1 million desks by 2022. Additionally, leasing activity by the co-working segment is expected to grow by 29 percent during 2015-2022.
The pandemic has not only slowed down the growth of the co-working segment but has changed the direction too. Here are some of the emerging trends that are likely to affect the coworking segment.
- About 60 percent of occupiers believe that work-from-anywhere (WFA) trend is likely to stay in the near to medium term.Organisations are likely to switch to a hub and spoke model.
- As per the survey, 61 percent of occupiers seek shorter lock-in period and rent assessment cycles as businesses have become highly dynamic.
- Since 93 percent of employees want a commute time of less than an hour, developers foresee a high demand concentration in the suburban and peripheral areas of cities.
The report mentions that India had relatively larger co-working formats spanning to about 50,000 sq ft compared to the world average of 7,000 sq ft. Most of the co-working office space happens to be in Bengaluru and Hyderabad. The two IT cities contribute to about 51 percent of the total space and about 66 per cent of the total leasing activity in the co-working segment.
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