The predecessor to modern co-working was hackerspaces and other collectives. These allowed professionals in a field to interact and share ideas. But with time, sharing didn’t stop with ideas and it moved on to resources.
Co-working space is a concept that originated about 15 years ago. The concept involves bringing different companies to work with a common space and infrastructure. This concept came into being because of the rise in prime real estate prices. Small tech companies and start-ups could not afford it. So, they wanted a setting to share resources to reduce costs.
Why Co-working Spaces Became Popular?
Co-working spaces came into being for the sole purpose of reducing costs spent on real estate. Although this is one major reason for the increase in demand, they have grown out to be more than that.
With a flexible working environment, co-working spaces offer a sense of being part of a bigger community. This is best suited for offices with very few workers or a group of freelancers and start-ups.
For any small tech-based start-up, the first need is getting a lot of connections. With a community filled with people from various fortes, co-working is a boon in disguise.
For a group of freelancers, paying monthly rents and spending money on infrastructure is useless. Co-working provides a way around that and pay only when used.
How The Co-working Model Generates Revenue?
The basic revenue for co-working spaces is the income from subscriptions. The rates that are charged depending on the amenities, location and the time for which the amenities are used. This is for companies that pay based on a long term membership agreement.
There is another type of co-working where a space is set up and provided on a lease basis to the highest bidder. The maintenance of the space and the amenities are managed by the owner.
Top Facilities That Make Co-working Spaces Appealing For Companies
- Networking is the most important advantage that a co-working community offers.
- Hassle free office maintenance at very low costs without any compromise on utility.
- With collaborative co-working spaces, locations other than the home location can be used.
- With high-end tech equipped conference rooms, meetings and conferences can run problem-free.
- Without the need to spend any money, co-working offers excellent interiors to promote a work environment.
- Common amenities include recreational spaces for all members. This ensures that the employees work all the time but also spend time for themselves.
- Industry talks, games and other events are also organized in co-working spaces to allow the members to bond into the community.
Co-working Culture In India
India saw its first co-working space in 2012 when 91Springboard started its operations. Although it did not cater to the needs of companies like spaces today, this was the start in India.
Today, Co-working is the fastest growing need in the declining real estate industry. This shows that it is highly in high demand. Since 2018, the trend has started to rub off on all major cities in India. At first Delhi, Mumbai, Bangalore and Hyderabad were seen as potential locations for co-working spaces. The trend is not spreading to almost all tier 1 and tier 2 cities in India.
Future Of Co-working On India
Expansions and takeovers
There have been quite a few new entrants in this market like Oyo, One Cowork, etc. Companies like these start with a foot in almost all major cities. So, smaller shared spaces can be acquired by such large players. Established co-working space companies like 91Springboard will expand operations in new cities. We can observe a lot of mergers and acquisitions in this field.
Domination by large enterprises
Large corporations will establish long-term deals for co-working. Co-working spaces will meet their day to day office space needs for the large part.
Today’s co-working is focused on the community as a whole. But with the rise in the number of spaces, client-based features are a new path to develop on. By providing features that cater to a niche clientele, more and more growth can be observed.
With over 40 percent of the population constituted by youth, India will see a rise in the number of start-ups. Small tech companies and Start-ups prefer Co-working over traditional office spaces as they provide better connectivity and infrastructure. This will lead to an increase in the share of Start-ups in co-working spaces.
Expansion in Tier 1 cities
Geography limits most Co-working platforms in India. Most of them exist only in a few cities. The expansion of such players into other tier 1 cities will be seen for sure in the next 2 years.
Growth in Tier 2 and Tier 3 cities
Bangalore, Delhi and Mumbai are the most preferred locations in Tier 1 cities. Although there are other cities with equal potential for expansion, many MNC’s are expanding to smaller cities. So, this untapped market will provide more buzz for the Co-working space market.
Expansion to dominate the office space market
The actual share of shared spaces is very low right now. But with the increase in the need for good office spaces, this will change. More and more co-working structures will come up in the next 5 years and their share will cover almost 30-40 percent of the office space needs.
New real estate market
As this model becomes more successful, co-working operators will come into play. Real estate owners will provide buildings that will be renovated and managed by the local operators. This will begin to exist when prime real estate costs increase with a decrease in availability.
The increase in the number of shared working spaces has seen a huge increase in India. With the emergence of start-ups in almost all tier 1 and tier 2 cities, this growth is inevitable. In the next 5 years, the demand for shared office spaces will increase manifold as the resources become scarce. Co-working spaces work based on annual seating capacity. This number being very low in India, it is possible for failure. But there is one question that remains, will the market conditions change like expected or is there something unexpected.