Co-working spaces set to expand capacity in 12-24 months as demand rises

By Grzegorz Próchnicki

Co-working spaces in India are poised to expand their capacity in the next 12-24 months due to a surge in demand from startups, global capability centres (GCCs), and information technology/information technology-enabled services (IT/ITeS). This increase is driven by the need for flexibility and cost optimisation.

According to a recent report by private equity advisory firm Avendus, India’s flexible (flex) workspace market is projected to reach 126 million square feet (msf) by 2028, up from 61 msf in 2023.

Around 250 flex workspace operators, with $3.5 billion in annual revenue in 2023, are estimated to generate revenues of $9 billion in five years.

For instance, co-working firm 315Work Avenue plans to expand its portfolio to 4 msf in the next 18 months, up from 2 msf currently. The company, which has a seating capacity of 40,000 across the country, plans to expand its geographical footprint to the New Delhi-National Capital Region (NCR) and Hyderabad.

“Major factors that come into play when companies look for office spaces include the availability of location, and this is where co-working space providers step in. Additionally, companies face challenges in building and creating an office space, which is where we step in to get it custom-ready for them. Co-working spaces also assist in financial matters as most of the capital expenditure is borne by us. Hence, this helps companies to allocate their funds for business. Moreover, we help companies stay focused on core operations rather than handling non-core ones. Another factor is the diverse community mix, as there is not only one company and its employees, but others as well,” said Manas Mehrotra, founder, 315Work Avenue.

Urban Vault has earmarked an investment of Rs 40-50 crore in 2024-25 (FY25) with plans to augment its existing 2 msf portfolio by 1 msf over the next two years. It also plans to expand its footprint in Hyderabad and Pune by FY25, alongside a strategic evaluation of the Delhi-NCR market and reinforcement of its presence in Bengaluru.

“One driving force is India’s growing macroeconomic level where GCCs are being set up in the country, which extends to flex offices. Another factor that has played a pivotal role after the pandemic has been the flexibility that employers want to provide their employees, and this can only be met by flex offices. Post-pandemic, most companies are moving to flex office spaces due to the hybrid work situation, reflecting a shift away from traditional fixed assets,” said Amal Mishra, co-founder, Urban Vault.
WeWork plans to inaugurate its first building in Chennai in early June. Currently, the company is spread out across 54 locations with more than 90,000 desks across seven cities.

The integration of technology plays a key role in meeting the growing needs of businesses, said Karan Virwani, chief executive officer (CEO), WeWork India.

“Earlier this year, we launched WeWork Workplace, a comprehensive space management tool, which helps manage their workforce as opposed to just managing the workplace, enhancing their overall hybrid experience. It facilitates organisations to leverage data-driven insights to optimise their real estate needs while saving costs,” he said.
With a current portfolio size of 10 msf, Smartworks aims to expand its platform to 30 msf and 50,000 seats within the next four years.

“After the pandemic, this segment has risen like a phoenix. Earlier, it would take companies a lot of time and effort to build their own offices and manage their daily operations. Now, in a flexible office model, one does not have to spend a bulk of money upfront, as there’s a rental payment that is amortised, and time is also saved,” said Harsh Binani, co-founder, Smartworks.

New York City-based Upflex’s domestic arm attributes the growing demand for flexible spaces among corporates to factors like budget balancing, availability of commercial real estate at a lower price, and ease of operations as key drivers.

“This trend is not only in India but a global phenomenon, and today, businesses have become dynamic. The biggest challenge corporates face is managing their balance sheet with less expense. Precisely, this is why managed workspaces and co-working have become one of the most popular options. Companies do not need to invest capital yet corporates get flexibility,” said Pratyush Pandey, CEO, Upflex India.

Hong Kong-based The Executive Centre (TEC) has a flexible workspace presence in India across Gurugram, New Delhi, Mumbai, Pune, Bengaluru, Chennai, and Hyderabad and plans to expand in these regions.

“Large corporations across industries are embracing flexible workspace strategies to diversify their real estate portfolios. Sectors such as IT/ITeS, pharmaceutical, banking, financial services and insurance, software-as-a-service, and financial technology are among the front runners,” said Nidhi Marwah, group managing director, South Asia and Middle East, TEC.