Coworking spaces slash discounts as demand recovers

Even as the Covid-19 situation continues to ease in the country, the co-working space has rolled back most of the discounts that were on offer for corporates. The sector bore the brunt of successive Covid waves as people were shut inside their homes and corporates were asked to work from home.

New Delhi-based Awfis said that as employees are being asked to return back to office, occupancy is back to pre-covid levels in the current year. “Awfis recently rolled back its discounted offers”, Sumit Lakhani, Chief Sales and Marketing Officer, Awfis, told DH.

Analysts and industry players now see that prices will only go northwards from here. Bengaluru-based IndiQube’s CEO & Co-Founder, Rishi Das, predicts that there will be at least a 15-20 per cent correction in the rentals of commercial workspace over the next 3-6 months depending on the market. “Customers are still in the hangover that they can land a discount, however, the scenario today is that either enter into a contract at the current price or this is only bound to go up”.

When the pandemic was at its peak, demand distress had given way to discounts in prices and were to the tune of up to 50 per cent. While these discounts helped recover costs and rentals, does that give me healthy profit and make sense in doing business till today? asks Sanjeev Nagwekar, Chief Operations Officer, 91Springboard. The sector witnessed a price war because, during the height of Covid-19, everybody was lying vacant so it was a customer’s market but the scenario has reversed now.

Industry watchers agreed.

Anuj Puri, Chairman, ANAROCK Group believes that as the threat of the virus recedes due to natural immunity and satisfactory vaccination coverage, many offices have/are preparing to come back to normalcy, albeit in a new normal – the hybrid model. And this is not just because of demand going up but also because of overall operating costs for operators going up “amid the rising inflationary trends”, Puri told DH. He added that the the offers are gradually being rolled back due to demand recovery.

As per an ANAROCK survey, in this new work environment, coworking spaces have emerged as the best mode for adopting hybrid models at offices. As many as 46 per cent of respondents voted in favour of the model, followed by 30 per cent who voted for the hub and spoke model.

Expansion plans

With demand back, firms are planning to go full throttle on augmenting their capacity. According to the Colliers and CRE Matrix report, it is expected that startups will lease 29 million square feet of office space, including the flex spaces by 2022-24.

Dharam Mehta, Country Head, Digital Products, WeWork India, says that it has seen a strong revival in demand in the past year and has leased over 1.7 million square feet of office space to large enterprises and smaller firms, and foresees the trend to continue. “We plan to expand our portfolio by one million square feet in 2022, with over 50 per cent of the planned development pre-committed by enterprises”. Co-working spaces are also expanding to tier I & II cities now although the focus would be on major cities. Awfis plans to add spaces in smaller markets like Lucknow, Coimbatore, Bhubaneshwar, Jaipur and Nagpur as we aim to achieve 200 centres in 18 cities by the end of 2022.

Another Bengaluru-based firm, 315Work Avenue, currently manages around 20,000 seats spread over 1 million square feet across multiple locations in Bangalore, Mumbai and Pune. The company plans to add another 5 lakh square feet office space in the next six months.

Add-on benefits

The co-working sector is also re-inventing itself and coming up with better workspace management facilities such as cafeteria solutions, smart transportation, IT solutions, etc.

WeWork recently launched a production studio that allows digital creators to record, shoot, and create content in a professional and cost-effective manner, owing to the growth in the content creation industry.

Organisations have also begun to adopt the 'coworking space first' approach. "This not only decreases commuting and travel for employees but also emphasises convenience and flexibility", said Nidhi Marwah, Group Managing Director, The Executive Centre.

Anarock says that the workplace is now being looked upon as an environment that needs to be optimally managed which necessitates an element of
specialisation, in which the flexible space operators are filling the niche as a specialist in workplace management. “Going forward, we are likely to see the developers of commercial office assets across the country align with such operators and carve out specialised spaces for them”, notes ANAROCK.

As demand gathers momentum for the sector, expansion and added benefits offered by the firms are expected to further push up the prices in the days to come, experts opine.

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