Hybrid work pushes co-working space occupancy up by 8%: Report

Instead of getting 'wiped out' as the pandemic predictions were about co-working spaces, their share in the office space rentals has, in fact, grown sharply because of hybrid work formats. 

With companies getting 'back to work,' co-working spaces witnessed an 8 per cent growth on a year-on-year (YoY) basis, a report by real estate researchers, Anarock has revealed. Out of a net 34.1 million sq. ft. office space leased this year, 13 per cent so far has been taken up by co-working spaces which approximately comes to around 4.43 mn sq.ft. 

The jump is a significant 8 per cent over FY 20-21 share of just 5 per cent of the net absorptions of 21.32 mn sq. ft. 

This also marks the highest 'category' jump in terms of office space absorption. The manufacturing and industrial sectors rose 4 per cent on a YoY basis while IT and ITeS sectors witnessed a decline of 8 per cent and 6 per cent, respectively, during the same time.  

Explaining the trend, Anuj Puri, Chairman - Anarock said, "The hybrid work model emerged as a formidable new force on the Indian office real estate market during the pandemic. There was a gradual but significant transition to flexible spaces which offer businesses and employees the agility to continue operations seamlessly. Co-working spaces have become the most preferred option to adopt the hybrid work model, compared to the other options of changing office layouts or the hub-and-spoke model." 

Anarock data further revealed that 'large deals' which are more than 0.1 mn. sq.ft accounted for nearly 50 per cent of the overall office transaction across top 7 cities in FY22 compared to 47 per cent in FY21. Mid-sized occupiers also witnessed a marginal rise of 1 per cent of total office leases in FY22, and smaller deals saw an annual dip of 4 per cent. 

"Mid and large deals were prominent in the current financial year as occupiers are optimising their portfolios," explained Puri. "The new realities include bringing employees back to the workspace, increased assessment of new leases, and an improving hiring scenario." 

The supply side witnessed growth as well. FY 22 saw new supply of 51.2 mn. sq, ft across top 7 cities marking a 27 per cent rise against FY21.Southern cities of Bengaluru, Hyderabad and Chennai dominated new completions with a total of 58 per cent share at around 29.85 mn sq. ft. 

Following fresh completion, the average vacancy levels across the top 7 cities rose by 1 per cent - from 15 per cent in FY21 to 16 per cent in FY22.

With new supply, vacancy levels too have increased across the country. At 28.5 per cent, NCR has the highest office space vacancy amongst the top 7 cities, followed by Kolkata and MMR at 23.5per cent and 15.75 per cent respectively. Pune's office space vacancy rate stands at 8.5 per cent. 

Also read: The New Avatar of Coworking Spaces

Also read: 77% firms ready for hybrid work model, 43% claim employees willing to return to office: Survey