'Work near home' lifts corporate leasing of co-working spaces by 73% in H1

Companies are looking at managed spaces for the triple benefits of cost savings, lease flexibility and the hybrid/hub-spoke model of working that they offer

The leasing of flexible or co-working spaces by companies has seen a spurt in the first half of the year as companies took offices closer to their employees’ homes during the second wave of the pandemic.

The surge was as much as 73 per cent, with 31,538 seats taken on lease during the first half of 2021 on a yearly basis, property consultant Cushman & Wakefield said. Enterprises had leased 36,255 seats in the whole of last year.

In contrast, leasing of office spaces in six Indian cities in H1 of FY21 fell 22 per cent year-on-year to 10.1 million sq ft, property consultant Colliers said early this week.

Cushman said the total seats leased by enterprises could cross 50,000 during the 2021.

“The pandemic has forced companies, irrespective of their size, to revisit their footprint both from cost and employee flexibility perspective. Given the current market dynamics, several enterprises, both large and small, are adopting a cautious, wait-and-watch approach about signing new office leases,” said Anshul Jain, managing director, India and South East Asia, Cushman & Wakefield.

Instead, Jain said corporates are looking at managed spaces as a smart business solution for the triple benefits of cost savings, lease flexibility and the hybrid/hub-spoke model of working opportunity that they offer.

"Growing demand from enterprises over the last two to three quarters indicates that the surge will continue in H2 2021 and 2022 as well,” he said.

Rajesh Agarwal, managing director and CEO, Shapoorji Pallonji Investment Advisors said that corporates are waiting for the uncertainty to end before leasing permanent space as well as providing disaggregated work spaces for employees closer to their homes.

Co-working players are clearly seeing the shift to flexible spaces.
 

"We have seen a consistent rise in large enterprises wanting to shift to flexible workspaces and sign long-term deals with us. Over 60 per cent of our member base in India comprises large enterprises and since the lockdown, we have seen a 10 per cent rise in our enterprise portfolio including companies like Tata Sky Broadband, Colliers India, and many more," said Karan Virwavi, chief executive at WeWork.

Virwani said a key factor for this growth is the focus on business continuity and cash conservation becoming imperative. "Flexible lease options and customized product offerings provided by WeWork ensure control on the cash flow, making room for long-term expansion and employee retention and helping them save on overhead costs,” he said.

Tata Sky Broadband in May 2021 signed a one-year commitment to its on-demand service of Wework. This allows TATA Sky Broadband employees to work from any WeWork location across the country and using the On-Demand product, teams can choose when and where they would like to come together and collaborate. Colliers India has also recently shifted their headquarters to WeWork at Two Horizon Center in Gurugram.

Neetish Sarda, founder of  Smartworks said that there has been a growing interest of Enterprises towards the flexible structure. In the new normal, a more distributed workspace model across cities and regional locations will take precedence." With employee health and well-being taking centre stage, companies are changing the Pandemic model of "work from home" to "work near home", offering maximum flexibility and, thus, the rise of flex spaces," Sarda said.

Sarda said the first quarter of 2021 was one of the finest for the company, during which it leased over 300,000 square feet to clients and expanded its footprint in Hyderabad with a 250,000 sq ft facility, Aurobindo Galaxy.