Demand for co-working spaces surges due to flexible work, high realty costs

Co-working spaces in Bengaluru are seeing a huge surge in demand driven by startups looking for a flexible work environment with premium amenities while cutting rental costs on owned properties. Bengaluru tops the list of cities with the highest available stock of flexible office space in the Asia-Pacific (APAC) region, according to a CBRE report.

Sheer economies of having facilities like a boardroom, uninterruptible power supply (UPS) room, cafeteria, recreation room, all under one roof without worrying about the bulk expense, is yet another reason for companies opting for shared work spaces.

Managed workspace providers such as Indiqube, Urban Vault, and WeWork are among the top players offering the so-called 'office in a box' shared working experience. Focused on driving entrepreneurship, innovation, and hospitality, co-working spaces are fuelling Bengaluru city as well as modern India.

According to the 'India Real Estate Q3' report by Knight Frank, the country recorded office transactions of 16.1 million square feet during the July-September quarter. In addition, Bengaluru had a new office supply of 4 million square feet in 2023. Bengaluru's rental growth was driven mostly by new Grade A spaces, modern built spaces that offer top-notch amenities and infrastructure in a central location.

Indiqube, started in 2015, is one of the major players serving the workspace needs of employers on the lookout for office spaces. Currently, operating 6 million square feet of offices across India, Indiqube has its largest office let out to Flipkart-backed Myntra, located on the Outer Ring Road in Bengaluru.

"We have added 2 million square feet of office space in the last year and are looking forward to adding about 2.5 million square feet across India, in order to cater to the needs of companies and help them outsource benefits and facilities," Rishi Das, co-founder and chairman of Indiqube, told Business Standard.

Commenting on the market outlook, Das said that the company is eyeing to expand to micro markets within larger cities in a "practical and strategic manner". Indiqube has plans to tap into Ahmedabad in the coming months, along with other Tier-II cities.

Founded in 2018, Urban Vault operates 1 million square feet with about 40 offices located in Bengaluru. The company eyes expansion to other exclusive localities within the city in the near future. The provider has added 10,000 desks in the October-December quarter across major micro-markets of Bengaluru as part of the company's strategy to expand its portfolio to meet rising demand for flexible workspace. With the latest addition, the company's total inventory jumped to 25,000 desks in Bengaluru alone.

"There is a huge demand for managed flex spaces from corporates of all sizes. We are expanding our portfolio in a big way across prime locations in Bengaluru," said Amal Mishra, co-founder and chief executive officer of Urban Vault.

Besides several perks, co-working spaces also help corporates save on capital expenditure. "Corporates do not have to worry about managing physical infrastructure and housekeeping of their offices," Mishra added.

In 2017, WeWork, a US-based workspace solutions and service provider, inaugurated its first co-working space WeWork Galaxy in Bengaluru. Since then, WeWork India has grown from 2,200 members in its first space to over 70,000 members and 90,000 desks across 7 cities and 50 locations today.

WeWork's member composition comprises 80 per cent enterprises and 20 per cent small and medium businesses (SMBs), startups, entrepreneurs, and solopreneurs.

Karan Virwani, chief executive officer at WeWork India, says, "We are focused on long-term sustainable growth and are looking forward to adding another 20,000 desks year-on-year, underscoring our commitment to continuous advancement."

Bengaluru was the most active market accounting for 31 per cent of the total office area transactions during the first quarter of 2023, according to a Knight Frank report. Bengaluru also grew the most during H2 2022 at 11 per cent Y-o-Y, according to the survey report released by the real estate consultancy in May. Property prices in Bengaluru are expected to see a further rise in the coming months as the Karnataka government has revised the 'guidance value' of properties by up to 50 per cent with effect from October 1, 2023.