Co-working spaces take the floor as next realty asset

When Poorvi Shetty and Tejaswi Murthy quit their jobs to start their own company last January, a severe resource-crunch forced them to work out of Starbucks for the first nine months.

Today, the duo shares a 1,200-sq ft office space in one of Bengaluru’s highstreets with another technology start-up, and have access to a small pantry, a large community area and independent cubicles, reducing their capital costs by half.

Similarly, Kuldeep Singh, who quit his job to found a not-for-profit sports company, couldn’t afford to rent office space, and opted for a virtual office at Regus Business Centre on MG road, Bengaluru, where all his mails, emails and telephone calls are handled by a secretarial staff and re-routed to him.

Conference/meeting rooms, common areas, tea-coffee, fax, copier are also available to him for meetings, and his gold membership of ₹1 lakh per annum gives him access to all of Regus’ 3,000 global offices and 75 offices pan India.

Traditional office spaces are making way for flexible, fully serviced co-working spaces to accommodate the needs of a millennial workforce, a thriving start-up community, freelancers, independent consultants, SMEs and interestingly even large enterprises that are looking to extend their reach across the country without incurring huge overhead costs.

Virtuous Retail’s collaborative workspace, The Hive, opened a 60,000-sq ft co-working office space with 800 desks across three floors in Bengaluru, in May, with the next one to open in Chennai in December 2017.

Located at VR Mall, The Hive gives its members seamless access to suites and residences, fitness club, spa and salon, rooftop pool, lounge bar and microbrewery. “We offer an integrated lifestyle along with all amenities so that companies can focus on their core business while we drive away hassles of maintenance, set-up and service, and provide great flexibility to scale up or down, move out, without having to sign up for long lease and lock-in periods with hefty deposits,” said Rajiv Raichand, Director, Virtuous Retail.

InstaOffice, started in October 2015 by Vikas Lakhani and Devendra Kumar Agarwal, has opened six co-working spaces — five in Gurgaon spanning 15,000 sq ft and one in Bengaluru with 5,000 sq ft, totalling 250 desks — with plans to open in Jaipur and Mumbai soon.

“There is a huge demand for small offices spaces for 5-10-people teams. Our shared-resource users also get support services such as secretarial, legal, accounting, recruitment, and design, apart from access to high-speed internet, in-house hospitality, housekeeping, security, receptionist, mail, call handling and runner services,” said Lakhani, co-founder and CEO, InstaOffice.

Sidharth Menda, CEO at CoWrks, India’s largest community co-working space for millenials at 1,60,000 sq ft, with over 2,800 members in Bengaluru, said: “India has 200 co-working spaces across metros, typically 5,000–20,000-sq ft spaces, which are still in a nascent stage.

“However, co-working spaces will become another asset class of real estate just like residential, offices, retail hospitality, industrial; As per our estimate, by 2018, the co-working space industry in India will witness an annual industry-wide investment of approximately $400 million per year.”

Traditional offices are 30 per cent more expensive to set up and run than co-working spaces, because of cost of lease, fit-out, utilities, and administrative and operational costs, added Menda, who plans to open four new large-format co-working spaces in Bengaluru, Mumbai and Gurgaon by December.