With major companies and businesses, including start-ups, are increasingly opting for coworking spaces, demand for flexible office spaces has hit a new high after the pandemic. According to latest ANAROCK data, out of a net absorption of approx. 8.2 mn sq.ft across the top 7 cities in Q1 2023, coworking spaces had a 27 per cent share. Back in pre-pandemic Q1 2019, its share was just 14 per cent of a net office absorption of about 9.3 mn sq. ft.
Among the top 7 cities, Bengaluru and NCR together accounted for 66 per cent (1.43 mn sq. ft.) of net coworking absorption in Q1 2023. Pune and Chennai together saw 0.52 mn sq. ft. of coworking spaces absorbed in the same period. In terms of overall growth in coworking demand, the top 7 cities witnessed a 90 per cent growth in net absorption in this period – from 1.3 mn sq. ft. in Q1 2019 to 2.18 mn sq. ft. in Q1 2023.
Besides start-ups and other businesses, many IT/ITeS companies also prefer flexible spaces over regular office spaces today, with a strong emphasis on workspace flexibility for employees.
Utkarsh Kawatra, senior director – myHQ (ANAROCK Group), said, “Coworking spaces demand weakened considerably after Covid-19 disrupted the workplaces equation across the country. We’re seeing a decisive reversal of this negative trend now, with coworking particularly attractive because of the disrupted IT/ITeS employment scenario.”
Flexible office spaces allow firms to deploy instantly rather than having to contend with office layouts and fit-outs, at costs comparable to regular office spaces which also involve long lock-in periods. Coworking spaces are shooting up in major cities with low Grade A offices vacancy levels and a higher demand from start-ups, freelancers and corporates looking to expand.
In IT/ITeS-driven cities like Bengaluru, Chennai, and Pune, the relatively low vacancy levels in Grade A offices have spurred the demand for coworking spaces.
“This is also the case with Delhi NCR, where low commercial space vacancy levels have fostered a rich growth environment for coworking setups in areas such as Gurugram and Noida,” said Kawatra. “In MMR, corporates looking to expand aggressively and shift their operational divisions to smaller distributed locations are focusing on coworking spaces,” he added.