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Recent data from Anarock reveals that co-working spaces accounted for 27% of the net absorption of approximately 8.2 million sq ft across India's top seven cities in Q1 2023, indicating a growing trend in the office real estate market. This is a substantial increase from Q1 2019 when co-working spaces made up only 14% of the net office absorption of around 9.3 million sq ft.
Bengaluru and the National Capital Region (NCR) led the way, with a combined 66% of net co-working absorption in Q1 2023. Pune and Chennai followed, together accounting for an additional 0.52 million sq ft of co-working spaces absorbed. Kolkata witnessed 0.25 million sq ft of office space absorbed during the same period, with co-working players contributing 12% to the total.
The top seven cities experienced a 90% growth in net absorption of co-working spaces during this period, increasing from 1.3 million sq ft in Q1 2019 to approximately 2.18 million sq ft in Q1 2023. This growth can be attributed to several factors, including an increasing preference for flexible spaces among start-ups, IT/ITeS companies, and businesses. Furthermore, co-working spaces have expanded beyond traditional city centres to residential hubs, malls, hotels, and large office parks, offering greater flexibility and proximity to employees.
Flexible office spaces provide several advantages over traditional offices, including instant deployment options and the elimination of office layouts and fit-outs, making them more cost-effective than traditional office spaces with long lock-in periods.
The surge in co-working spaces in major cities is driven by low Grade A office vacancy levels and increasing demand from start-ups, freelancers, and corporations looking to expand. Many companies continue to adopt hybrid working models, utilizing smaller satellite offices or remote teams working from neighbourhood on-demand co-working spaces. These use cases contribute to the positive outlook for the co-working industry.
As the co-working sector continues to grow, it is also driving innovation in the way businesses and individuals approach workspace solutions. Many co-working spaces now offer a range of amenities, such as high-speed internet, ergonomic furniture, and collaborative areas, which cater to the diverse needs of their clientele.
Moreover, the rise of co-working spaces has fostered a sense of community among its users. These spaces often host networking events and workshops, promoting collaboration and knowledge-sharing among professionals from various industries.
In conclusion, the impressive growth of co-working spaces in India highlights the shifting preferences in the office real estate market toward flexibility, adaptability, and collaboration. With increasing demand from start-ups, freelancers, and corporations, as well as the adoption of hybrid working models, the co-working industry is poised for continued expansion, shaping the future of workspaces in the country.
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