With startup ecosystem gaining pace in India and Startups coming up in every domain, apart from internet economy, coworking spaces have seen a significant rise and adaption. The three main reasons why people prefer these spaces rather than a special office are:
- Lower rate of maintenance.
- Flexible work environment.
- Place to find people with different qualifications for different requirements.
The way people live and work in India is undergoing a paradigm shift. From a boring traditional office to a creative and conductive coworking office space. These types of workplaces help in building up a community and network around you, a network which helps in building up quality contacts. These contacts are quite helpful for first stage entrepreneurs.
According to JLL, the first half of 2018 saw a significant rise in coworking spaces leased, to 19 lakh sq ft from 6.4 lakh sq ft previously. By 2020, the estimated area is around 5-10 million sq ft, especially in tier-1 and tier-2 cities.
What do people require in coworking space?
Here are some basic requirements or facilities which people expect from coworking spaces:
- Latest technology with fast internet connectivity
- Conference Room
- Coffee and Snacks
- Registered emails
- Fun events
Some Big Player
The revenue model of these startups is pretty simple. They either earn through subscription fees or by charging according to the time. The rates depend on amenities being provided and location of this office. Typically in such place entrepreneurs or freelancers get an opportunity to interact with other independent professionals like writers, app developers etc..
Currently, the office spaces are experiencing double digit growth and these coworking platforms prove to be an efficient solution. The cities with the highest demand for such shared work spaces are Gurgaon, Mumbai, Bangalore and Hyderabad, cities which are seeing an exponential rise in tech and internet based startups.
The 2 big indigenous coworking spaces, Awfis and 91Springboard have seen a tremendous rate of growth, both in revenue and office space. In FY17, Awfis saw a growth of around 1600%, as the revenues rose from 1-1.5 Crores to 18-19 Crores. At the same time, 91Springboard saw a growth rate of 1300%, as revenues rose to 19-20 Crore from 1.5Cr previously. These figures are expected to triple by late 2020. The reasons are the increasing office maintenance costs, number of startups and scaling of these office spaces.
The measure of this industry is the number of seats. So, if we draw a consumer chart of total 15Mn seats, we get that around 10Mn seats are used by big and established companies, Other 2Mn seats by SMEs, 2Mn for Freelancers and remaining for startups.
This industry has caught eye of many investors. Many foreign giants like Wework are also expanding their footprint in our country, reason, youth taking up entrepreneurship as their career option. Pacing their growth into tier-2 and tier-3 cities will be utmost important, because cities like Ahmedabad, Pune, Vijayawada etc. are slowly turning themselves into startup hubs.
Combining coworking platforms and incubation centers is next big thing, where people can find investments, colleagues and a healthy environment all together at one place. Currently, a coworking space either leases or opens itself in some cafe’s, so with more deeper penetration with more affordable prices, people might slowly drift towards these modern workplaces. Currently, valued at around $1 Billion, the valuation might grow to $ 7-8 Billion by 2022, for this workspace sector.
Industry: Coworking Space
Top 3 companies: WeWorks, Cowrks, 91SpringBoard
Total number of seats being used: 15 Million
Number of seats used by big organisations: 10 Million
Number of seats used by big SMEs: 2 Million
Number of seats used by big freelancers and startups: 3 Million