Hyderabad: Co-working set to occupy larger pie in office space
While the IT sector players in Hyderabad deferred their expansion plans and accounted for an 18 per cent share in transactions during the second half of 2021 (July-December).
Hyderabad: Co-working sector is emerging as the fastest growing asset class within the conventional office space sector both in Hyderabad and other major cities of India, driven by the need for flexible and hybrid workspaces for businesses and enterprises during Covid times.
While the IT sector players in Hyderabad deferred their expansion plans and accounted for an 18 per cent share in transactions during the second half of 2021 (July-December), it was instrumental in pushing up the volumes generated by managed office/co-working players during the period, Samson Arthur, senior branch director – Hyderabad, Knight Frank India, told Telangana Today.
“Following its robust performance in the first half of 2021 (January-June), the co-working sector in Hyderabad maintained its momentum and accounted for 21 per cent of the space taken up during H2 2021, up from 8 per cent in H2 2020,” he added.
Smartworks and Tablespace were the most active players among the co-working sector during the period. An estimated 9,600 seats were taken up within such managed office premises in the city by enterprises during H2 2021.
The share of transactions in the co-working/managed workspace sector was the highest amongst all sectors during Q4 2021 as the need for flexibility and a hybrid working environment has been a growing phenomenon.
While the IT sector deferred its leasing activity, it was the primary driver for the spike in the co-working/managed office sector’s transactions during the Omicron influenced quarter, he emphasised.
India scenario
The share of the co-working sector in total transactions increased to 29 per cent in Q4 2021 from 11 per cent in Q4 2020. Gathering momentum in every successive quarter of 2021, and 84,000 seats were taken up in managed office premises in 2021. Co-working transactions in H2 2021 too went up to 18 per cent from 10 per cent in H2 2020.
The co-working player’s positioning as experts in the domain of workspace delivery continues to strengthen even as this sector goes through a consolidation phase that will see the weaker players eventually getting pushed out of the market.
Knight Frank India predicts, the active adoption of managed office premises by large enterprises is expected to continue as employee health considerations will necessitate a high level of flexibility in their workspace considerations, especially as the pandemic runs its course.
While IT continues to drive the office market with 49.2 per cent share of total leasing in 2021, the return of co-working at about 13 per cent is noteworthy, according to Savills.
“Co-working spaces have reinvented their offerings and repositioned themselves to suit the needs of occupiers,” said Arvind Nandan, MD, Research and Consulting, Savills India.
Future potential
With flexible spaces becoming mainstream, the coworking companies have seen a massive spike in the number of enquiries in 2021. The pandemic has highlighted the importance of de-densification of office space and adoption of hub and spoke model. In 2022, companies will continue to adopt the hybrid working model.
Manas Mehrotra, founder, 315Work Avenue, said, “A few trends that will dominate the co-working industry in 2022 include continued demand by large enterprises with customised workspace design requirements, preference for satellite offices, preventive health strategy by businesses and enhanced focus on technology adoption.”
The demand for flexible space will also be largely driven by consulting, IT-BPM, and ecommerce firms that are establishing multiple satellite offices in metro cities, Mehrotra noted.
As per a recent report, the industry is expected to double over the next five years at a compound annual growth rate (CAGR) of 15 per cent.
