By Manas Mehrotra, Founder, 315Work Avenue
The pandemic had compelled people around the world to work from home and create a new normal that has permanently upended the world of work. Hence coworking spaces will see greater demand as we head into the post pandemic world due to their inherent readiness to add value and are best positioned to adapt and redefine the future of workspace. Taking cognizance of the same, companies have started acknowledging the benefits of hybrid work and considering coworking spaces to support innovation-led growth. The advantage of capital-light model provided by coworking industry and ability to scale up and down businesses without interruptions in work culture is proving to be the perfect solution for companies. The pandemic has prompted companies across sectors to consider asset-light strategies to fuel growth and strengthen financial performance as well as to conduct a comprehensive review of business portfolios and make long-overdue operational changes.
The shift in consumption from traditional office spaces to new age flexible workspaces is a consequence of enterprises deciding to scale down capital expenditure. And short-term plans have evolved into a long-term business approach to ensure continuity and diversify risk as enterprises embrace adaptability and agility in their work culture. Importantly, for enterprises, the vision is to go capital-light through asset management. This would mean that companies now look for a space that would give them an option to expand or downsize at any point in time, allow growth without high investment and avoid costs on infrastructure. Coworking spaces have addressed this need in the new work atmosphere for companies looking at asset light model to enhance profitability.
Companies have also come to realize that employees are their greatest asset and that they must take cognizance of their needs and preferences to pivot to a human centric strategy. Given that hybrid working trend is on the rise, many companies are opting for flexible spaces to provide work locations in closer proximity for employees. This has prompted many enterprises to adopt asset light model by quitting their long-term leases and partnering with coworking players for workspace needs at multiple locations which is a viable option in the current scenario.
As per a recent report, in 2021, managed spaces hit a new high with enterprise leasing close to 80,000 seats, over double the number of seats leased in the previous year. The final quarter of 2021 saw leasing of over 28,000 seats, a brave new high for the sector. This trend bolstered the confidence of managed space providers, and collectively they accounted for around 9.3% of total office spaces leased in year 2021, rendering the sector third largest occupier of Grade-A office space in India after IT-BPM and Engineering & Manufacturing sectors. As per quarter ending December 2021, there is well over half a million managed seats operational across the top-8 commercial real estate markets in India. The previous year saw an 18% annualised growth in managed seat inventory, thereby demonstrating rising confidence of the operator community. The share of coworking in pan India Grade A office inventory has risen steadily from less than 1% in 2016 to around 5-6% by the end of 2021.
Anticipating businesses being resilient, coworking spaces are expected to emerge stronger in the post-Covid world. Flexibility and well-crafted strategies to promote a safe and healthy coworking environment are also attracting many businesses.
According to another report, 94% of Fortune 1000 companies said the pandemic led to supply chain disruptions, while 75% said COVID-19 negatively impacts their businesses. To overcome these challenges, companies explore new ways to mitigate risk and reduce operational costs. The World Economic Forum calls the COVID-19 pandemic “a wake-up call for companies to have a plan to deal with disruptions to ensure business continuity.” Hence, many companies have become more asset-light to rise above the pandemic’s economic damage and supply chain turmoil.
Going forward, the hub-and-spoke model will come into effect wherein a large corporate office will have a ‘central office’ and a set of smaller or “satellite offices’’ spread across different parts of the city. In the near future, we expect a pick-up in demand for well-located, high-quality and efficient flexible workspaces, resulting in them occupying a greater portion of the total commercial office portfolio.
In conclusion, it can be said that coworking has undergone modifications to align itself with the ‘new normal’. There will be more fluidity and customization to the model that will allow coworking to position itself as the most viable option in the future too. Also, adopting asset-light business models are expected to be increasingly adopted by companies across the value chain well beyond the current Covid-19 crisis. This is in response to an increasing need for innovation, maintaining liquidity, and building more agile and resilient operating models to succeed in the post Covid world.
Corporate Comm India (CCI Newswire)