Co-working office space demand rising on affordable rent: JLL

Co-working spaces are rapidly popping up across Indian metros and tier-II cities, says JLL MD

Affordable rents and flexible working options are driving the demand for co-working space in Delhi-NCR with the numbers of such business centres expected to rise over 40 during this year, according to a report.

There are currently over 30 co-working business centres, with more than 2,500 seating capacity, across the national capital region, property consultant JLL India said.

The small and medium enterprises, along with start-ups, are the biggest target clientele for the companies operating these co-working business centres. The cost per seat is in the range of Rs 7,000-Rs 15,000 per month.

"Co-working spaces are rapidly popping up across Indian metros and tier-II cities. Through these, start-ups get flexible working options at affordable rents. These spaces offer desks at cheaper rentals in an office-like environment," said Nitish Bhasin, Managing Director - Markets, JLL India.

Business nomads, expats or those travelling to the country for a few months also prefer such options instead of working out of coffee shops, he added.

The increasing number of freelance professionals and consultants in today's globalised workforce are driving this phenomenon. These centres are also in great demand with corporates looking for flexibility in work locations.

"Delhi-NCR is definitely among the more prominent regions witnessing this global trend. In 2016, the number of co-working spaces in Delhi-NCR was more than 30; this year, it is expected to go over 40," Bhasin said.

The average occupancy share of co-working office spaces across NCR is about 70-75 per cent, but this would go up once the recent seat additions get fully leased.

Of all micro-markets, the central business district (CBD) of Delhi has the lowest vacancy in this segment at 8-10 per cent, while all other micro-markets have vacancy levels in a range from 20-35 per cent.

The number of players specialising in co-working office spaces across India is expected to surpass 100 sooner rather than later. Some of the major co-working spaces in the Delhi- NCR are run by firms like 91 Springboard, Awfis, Investopad, Innov8 and Alt F, among others.

Apart from freelancers and consultants, some corporates offer flexible working options to their staff by leasing a few desks in some of these establishments.

To reduce their financial burden and simultaneously motivate and retain talent, more corporates could turn towards co-working spaces in the future, the report said.

Developers, too, are now starting their own co-working offices to provide incubation spaces, or divide large floor plates for smaller occupants.

"There is currently very limited supply of co-working spaces - but once this situation improves, the demand for them will skyrocket. As bigger co-working players enter India and more such facilities crop up across cities, this category can prove to be a major disruptor on India's commercial real estate market," Bhaisn said.