Start-ups are starting to take over workspaces across the country. With industries and start-ups rapidly increasing there has been a huge boom in workspaces and office spaces.
Coworking spaces are set to revolutionize the workspace industry and change the way companies work. Coworking spaces are cost-effective spaces located at prominent locations, with a vibrant and professional environment. Coworking spaces are used by enterprises, freelancers, and corporations from various sectors from finance to marketing to technology and everything in between.
According to a new report by Colliers India and CREMatrix, Indian start-ups are looking to move into shared offices on a large scale. The report predicts that between 2022 and 2024, startups will soon rent 30% more office space than the six major cities across India. This translates to roughly 29 million square feet of office space compared to the 22.4 million square feet of office space leased between 2019 and 2021 (compared to just 2% in 2010).
Office spaces for lease are set to increase by 30-35% in the next few years. Flexible office spaces have witnessed a steady increase in Mumbai, Delhi, Chennai, Bangalore, and Hyderabad. The majority of the IT companies operating in India have started getting expanding their employee base and back to working from an office. With offices slowly opening back and employees returning to the office, these workspaces are predicted to increase in the coming months. Nearly 25% of the overall new workspaces in 2022 are already pre-leased or occupied, and developers are expanding these coworking projects.
Growth of Start-ups and Coworking Spaces
The coworking industry is hugely determined by the growth of start-ups and the number of industries globally. The coworking industry has a global market value of about 26 billion US dollars.
Flexibility has emerged as the key factor for many occupiers over the past years. As many companies have struggled with hybrid work models, corporations and start-ups are looking for alternative workspaces that offer productivity and flexibility. According to reports Coworking operators in India sold roughly 55,000 seats in 2021, up from 36,000 seats in 2020, and these numbers are expected to double in 2022.
The reason for this exponential growth is the rise in technology, IT advancements, and exposure to the global market. The steady rise in the number of start-ups across various industries globally increased the demand for coworking spaces, driving the market during the predicted period of time. This immense rise in the numbers is due to the benefits of this alternative to traditional offices.
Start-ups and small businesses have limited resources and do not have the resources to spend a ton on office spaces. It is essential for businesses and entrepreneurs to look for sustainable and affordable alternatives for their workspace requirements. Coworking spaces offer the right resources and help start-ups to establish themselves and build loyalty and trust. With start-ups and entrepreneurs rising in Chennai, Bengaluru, and Delhi-NCR, these cities have seen a steady rise in the absorption rate, accounting for almost two-thirds of the total. Bengaluru saw 5 million sq ft of space absorption which is 5% higher than and the highest amongst the three key cities.
Demand for Flexible Workspaces for Start-ups
According to the 2021 NASSCOM Tech Startups Report, India’s start-ups have seen record-breaking growth over the years. The start-up industry has seen the most growth in this sector, which now occupies around 10% of the total office space in India.
Flexible workspaces have seen a rapid growth of 13–15% in gross leasing activity. This accounts for a 5% increase from last year. Large corporates continue to explore managed offices, and this has led flexible office spaces to open new centres in metros and even in non-metro cities. With such a rapid increase in office spaces, coworking operators have started to capitalize on this opportunity to meet the growing trends.