At the intersection of real estate, technology and the future of work lies an industry that has become one of the most-recognisable words in the business vocabulary over the past few years.
As of March 2018, there were 14,411 co-working spaces in the world, and the number has undoubtedly grown exponentially this year. It is estimated that the number of co-working members will rise to 5.1 million by 2022.
From being considered just a ‘fad’ or a ‘trend’ suspected to fizzle out sooner or later, the co-working movement has gained further ground and continues to expand exponentially.
Closer home, co-working spaces have gradually become one of the most sought-after workspaces for startups looking for a low-cost, low maintenance, and innovation-oriented work environment.
According to reports, co-working companies acquired two million sq. ft space in the first quarter of 2018, which exceeded its total tally of 1.8 million sq. ft the industry took up during the entire 2017. Over the next three years, the annual transaction numbers are expected to grow 3X over the current level.
More than 400 shared workspaces run across the country today, and the number of co-working players is pegged at 200. Some of the prominent co-working players in the country are WeWork, 91springboard, Awfis, etc. However, this number is expected to come down drastically as the industry witnesses a significant consolidation through mergers, acquisitions and buy-outs. This trend reflects the co-working industry condition in similar markets such as China, where mergers with smaller players are arguably the most popular way for bigger players to enhance their market share.
Concerted efforts directed towards the growth of the stifledIndian startup ecosystem and global aspirations seeking aggressive growth has helped the co-working industry flourish. Moving away from the stifling work environment of conventional 9-5 office spaces that prioritised protocol over productivity, co-working spaces focus on innovation, comfort and the needs of the ‘new professional’ demographic, comprising freelancers, multi-sector entrepreneurs, and startups looking for cost optimisation and even many larger enterprises as recent trends suggest.
The investor community has also sat up and taken notice of the sector, as is evident from the $20 million investment made by Sequoia Capital and a host of other national and global marquee venture capital networks. The sector’s clientele today is a healthy mix of startups and large Indian corporates, thereby assuring the investors of getting healthy returns and a positive exit. In fact, the success of the co-working sector has given an investment fillip to similar concepts in other sectors, such as co-living and co-retail.
With the world’s youngest workforce, a considerable improvement in remote technologies including the onset of IoT, and the increased number of self-employed professionals will see the co-working sector on a stronger growth trajectory in the future.
Some of the key cities which are witnessing the expansion of co-working spaces include Delhi NCR, Mumbai, Bengaluru, Hyderabad, Pune, etc. However, expansion across tier-II and II cities, both in terms of acquiring spaces as well as professionals looking to work from state-of-the-art workspaces, holds the key to the sector’s next round of transformation. Co-working players who are able to tap into the potential of these regions can probably emerge as domain leaders.
From an operational perspective, co-working spaces that offer a unique experience to its members, over and above the basic services, are expected to create a larger client base. Entertainment sessions, musical gigs, common luncheons and business events or conferences that facilitate the creation of symbiotic business relationships differentiate the work experience of a co-working space.
The future work ecosystem is a time of free-thinkers, and they need the dynamic, convenience-oriented environment of co-working spaces to achieve their potential.