Coworking firms lease 21% more office space in 2021 across top 8 cities

Co-working operators expanded their portfolio aggressively last year and took on a lease 21 per cent more office area across the top 8 cities to meet the rising demand of workspaces from corporates

Co-working operators expanded their portfolio aggressively last year and took on a lease 21 per cent more office area across the top 8 cities to meet the rising demand of flexible workspaces from corporates amid the COVID pandemic, according to Cushman & Wakefield.

The leasing of office spaces by co-working operators across eight major cities increased to 4.91 million square feet in 2021 from 4.05 million square feet in the previous year.

These eight cities are -- Bengaluru, Hyderabad, Pune, Mumbai, Delhi-NCR, Chennai, Kolkata and Ahmedabad.

Cushman and Wakefield India in its quarterly Office Market Beat report highlighted that the share of the co-working segment in the gross office leasing grew to 9.4 per cent last year from 8.1 per cent in the previous year.

Across eight major cities, the coworking players provided on lease 78,869 seats or desks in the 2021 calendar year to occupiers, mainly to corporates.

In 2020, the report said that 37,759 seats were given on lease to corporates in six cities.

In India, the major co-working, including managed office space, operators are WeWork, Smartworks, The Executive Centre, Simpliwork Offices, 91Springboard and The Office Pass, among others.

Commenting on the trend, Badal Yagnik, Managing Director, Tenant Representation, Cushman and Wakefield India, said the pandemic has led to a change in the way the office used to operate.

"With employees fast moving to a hybrid model, enterprise demand for managed workspaces has been on a constant rise, with shorter lease tenures and lower Capex driving leasing momentum," he said.

Yagnik expected India's flexible workspace sector to maintain its robust expansion even this year after ending 2021 on a strong note.

According to the report, cities such as Bengaluru, Delhi-NCR and Pune were the biggest contributors to flexible seat take-up during the December quarter.

The consultant noted that corporates have been increasingly exploring flex space offices, as it comes with benefits of shorter tenures, low capital investment and managed facility, among others.

Amid the COVID pandemic, the demand for flex seats has been growing strongly.

This explains the significant rise in office space taken on lease by flexible workspace operators in the fourth quarter of 2021, the report said.

Overall, the consultant said that the total gross office space leasing across eight major cities stood at 52.6 million square feet, while the net office space leasing was 21 million square feet during the last year.

The new supply of office space stood at 38 million square feet.