What are the demand trends for co-working spaces across the various sectors and cities in India? What is the forecast for the upcoming 3 years for this segment?
Even during the most economically stagnant period of the pandemic, investments continued to flow into the commercial real sector thereby displaying solid investor confidence in the Indian commercial real estate sector. And as we moved past the second wave of the pandemic, employees and companies felt confident to return to work. In conjunction with it, the coworking sector currently stands at 36 million sq. ft. and is expected to grow by 10-15% annually over the next three years, according to a recent CBRE report. Therefore, in the next three years, co-working space will witness exponential uptake as more and more organisations will decentralise operations.
In view of the same, the industry has witnessed a growth in demand coming from the Tier II & III markets of the country as large IT/ITeS, BFSI, and tech occupiers have expanded their base into these cities. The primary cause of this pivot is due to the reverse migration of workers, low operating costs, increased employee flexibility, and expanding the talent base. Over the past year, Awfis has partnered with many such large organizations for shorter lock-in periods and flexible leasing terms to set up professional workspaces for their remote workforce operating out of Tier 2 cities like Chandigarh, Lucknow, Coimbatore, Indore, Bhubaneswar, and Jaipur.
Q: Significance of the role co-working spaces are playing in the present corporate economy.
While the work-from-home model was a revolutionary change for the initial few months of the pandemic, soon several companies and employees started swaying away from it given the lack of engagement and technological challenges involved. Therefore, to keep up with these tough times, corporates are now focused on the concept of flexible spaces to balance employee needs with business requirements. The pandemic has certainly accelerated micro & major trends in the co-working industry ranging from automation of CRE for hygiene reasons to expanding in smaller cities for the migrated population.
Q: What are some of the best practices deployed by the company within its facilities? What are some of the new technologies being integrated by the company?
As more people are returning to work, social distancing, air quality & hygiene criteria will be looked over by prop-tech. Features like sensor-activated disinfectants, retina entry scanners, digitalized ventilator systems, etc. will be an integral part of property management for a co-working space. Therefore, Awfis has developed inhouse built solutions like billing software, booking engine, analytics, AI based Visitor Management System (VMS), IOT smart meeting rooms, POS, etc for the safety of workers. These solutions complement each other and enhance user experience in Awfis ecosystem. For example – VMS and Meeting room app can exchange data with booking engine. It also allows smooth entry at reception and meeting room. Additionally, for seamless operations at Awfis , Artificial Intelligence (AI) technologies, machine learning and data analytics help to optimize resources and are a key determining factor in commercial real estate. Digital transformation along with process automation has helped Awfis to scale without any incremental cost. For the future, we are looking at more AI and IOT based projects that focuses on data centric solutions like data mining. These solutions are aimed to provide much secure, convenient and contactless experience at Awfis.
Q: What are the design principles followed by the company for its infrastructure? Given that coworking spaces house several companies, how do you balance your own branding as a part of the equation within the space and its design?
Awfis is India’s largest network of coworking spaces and an industry leader in plush and modern workspaces. Awfis aims to provide workspaces that are vibrant and minimal and at the same time are equipped with collaboration areas that flaunt interesting furniture, installations and flexible settings for events. Each of Awfis’ spaces are bespoke and follow a design ethos that is urbane & minimalistic while being interlaced with the fabric of Indian culture. Awfis has ushered in a new standard of vibrant work ecosystems with Awfis Gold that are an exceptional blend of luxurious designs and best in class amenities, perfect for an elevated work experience in this post pandemic reality. These plush workspaces come well equipped with enterprise grade infrastructure, complete with glass enclosed cabins, dedicated desks, chic lounge areas as well as spacious meeting and conference rooms.
One of our key areas of expertise is creating customized spaces for our clients that truly resonate with their brand identity and follow their brand guidelines while keeping our core design principles intact. Our team of design experts strike this balance seamlessly which allows us to experiment with different colors, textures and materials to create a coherent space where other brands independently co-exist.
Q: What are some of the key factors affecting the co-working sector in India – key disruptors and changes in the vertical?
During the first wave of the pandemic, many businesses were struggling with the after-effects of the lockdown. However, the co-working industry took the crisis as an opportunity and during this time, Awfis successfully became a tech-enabled workspace solutions platform that provides products across the spectrum of work requirements.
With offices shut across the country, Awfis picked on these shortcomings with their offerings across the spectrum like: Awfis Enterprise Solutions where Awfis is expanding its product portfolio, Awfis has forayed into providing exclusive and fully customized offices for companies across the country. It is a hassle-free way for an enterprise to outsource the designing, building, and management of its ‘own’ office space. Several corporates have collaborated with Awfis to set up their headquarters, satellite offices, R&D centers, and back offices under the ‘hub & flex’ business model. Awfis also introduced Awfis Shop where it offers a range of curated work desks and ergonomic chairs from affordable to premium and international range. The portal is designed to cater to a bi pronged audience which entails of B2C and B2B customers and will supply to audiences across all the key metro cities, Tier 2 and Tier 3 markets. Additionally, we are working on some very unique concepts to take locational flexibility to the next level, one of which is Awfis Pod, which is standalone premium meeting space present in the choicest corporate locations.
Q: Though co-working spaces started as a hub for start-ups and entrepreneurs, they now cater to several large corporate houses – could you shed some light on these shifting trends in your customer portfolio?
Demand for coworking spaces in India is strong across segments. Awfis has a constantly growing and evolving portfolio of clients comprising both large corporates and budding start-ups. Our extensive network spanning across Tier 1 & 2 markets allows us to become the partner of choice in today’s hybrid work environment. We are seeing demand from large corporates enabling us to adopt demand led supply model and offer Grade A, fully managed workspaces to many MNCs as well as rapidly growing startups. Currently, 65% of our members fall into greater than 50 seat cohort. Most of the demand is coming from sectors like IT/ITeS. Interestingly, over the past few months we have seen higher number of new sales from less than 50-seat cohort – also pointing towards the increasing adoption of distributed teams and corporate India preferring increased agility & flexibility in their workspace models.
Q: What are some of the biggest challenges in the sector currently?
As many reports suggest, India still ranks at a low position when it comes to the ease of doing business. Since there are a host of rigidities around owning/leasing a property tagged with high taxes, it therefore, undermines the actual value of properties. Hence, to attract more businesses to India and incentivize the commercial real estate sector that includes the co-working spaces too, the government should give commercial real sector an infrastructure status. This will ensure easier access to institutional credit, simplify approval process, and help in reducing developer’s cost of borrowing. And while the pandemic shook the strongest pillars of the Indian economy, 2022 should be a year of recovery for the commercial real estate sector as the government is focusing on the upliftment of the startup sector along with an infrastructural development push in the tier II & III markets.
· Given that, there’s a vast untapped market in India across the upcoming tier-II and tier-III cities, how is the company planning its presence across the same? What are the future openings slated in the company’s portfolio?
Awfis has a portfolio of about 5 million sq ft of space across over 120 properties in India, and it includes over 70,000 seats. The portfolio spreads in an 85-15 ratio between Tier-I and Tier-II locations. Awfis plans to expand in the emerging cities of India i.e: Chandigarh, Lucknow, Coimbatore, Indore, Bhubaneswar, Jaipur, and Nagpur. Awfis is optimistic about the growth of the flex workspace industry this year, and in line with that Awfis aims to expand its base pan-India with 200 centres by entering 18 cities of India by the end of 2022.