'Double demand': How Covid boosted coworking space industry

With the onslaught of Covid-19 pandemic waning, the demand for coworking spaces has grown steadily over the past one and a half years to scale new heights. Latest data from real estate advisory and research group Anarock shows the share of coworking space in the overall office space market in India has nearly doubled in Q1, 2023 since pre-COVID days.

It shows, out of the net office space absorption of 8.2 million square-feet in the January-March quarter, flexible office spaces formed 2.18 million sq.ft. or 27 per cent. This was nearly double the share that it formed in January-March 2019. In that quarter, flexible office space absorption stood at 1.3 million sq.ft. out of the 9.3 million sq.ft. total office space absorption or 14 per cent of the total. Overall, the top 7 cities recorded a 90 per cent growth in net coworking space absorption in this period – from 1.3 mn sq. ft. in Q1 2019 to 2.18 mn sq. ft. in Q1 2023.

The steady surge in demand for flexible office spaces took place after it had hit the nadir during the Covid-induced lockdowns in 2020 and early-2021. During that period, leading coworking space providers had witnessed scores of clients leaving their premises.

According to Amit Ramani, founder & CEO of Awfis, there was a significant drop in business as most of its smaller customers had left in 2020. That, however, changed after the second Covid wave in the first half of 2021. Since then, its business has grown manifold. “Post the second wave, especially from July 2021, the recovery has been extremely strong,” he told Business Today.

"The perception of offices has undergone a profound change since the pandemic - the workplace is now perceived as an environment that must be optimally managed,” says Utkarsh Kawatra Senior Director - myHQ (owned by Anarock Group). “This necessitates an element of specialisation, in which the flexible space operators fill the niche as specialist workplace management firms. We are increasingly seeing the desire to cultivate an environment of collaborative enterprise that yields tangible benefits to the occupier, both in terms of cost and layout.”

According to Neetish Sarda, Founder of Smartworks, the Covid pandemic and its effects like work from home and/or remote working in fact accelerated the growth of the flexible workspaces significantly.

Anarock now estimates many companies will continue to follow a hybrid working culture, which involves setting up smaller satellite offices or remote teams using neighbourhood on-demand coworking spaces. All these use cases bode well for the coworking industry.

“Going forward, we are likely to see developers of commercial office assets across the country align with such operators and carve out specialised coworking spaces for them. The expansion plans of major players and the increasing appetite for this format from occupiers, property owners, and coworking operators will fuel growth,” Kawatra adds.

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