ETtechNew Delhi/Kolkata: After a quarter that saw a big bounce-back in demand, coworking firms say the second wave of the Covid-19 pandemic in India has impacted business and dealmaking, with some expecting as much as a 70% dip in demand this quarter.
But companies like Awfis, Smartworks, Indiqube, IWG, Dextrus and Incuspaze—and smaller ones such as My Place—are going ahead with their expansion plans, as they expect clients to demand more flexibility once they start making decisions about workspaces. Availability of labour, though, is an issue in carrying out the expansion projects.
Incuspaze expects a 60-70% fall compared with the last quarter, Managing Partner-India Sanjay Chatrath said. The slump would last only for a short while, he said, as more corporates are restructuring their current leases and looking to move into flexi spaces.
“On our part, we are also getting better deals. It’s a market favourable for tenants and landlords, and developers are extremely flexible,” Chatrath said.
Smartworks said that while decision-making was getting delayed, there was still a spike in inquiries. Co-founder Harsh Binani said that in addition to the existing 65,000-odd seats spread over 4 million square feet, 2-3 million sq ft of office space is under development and is planned to be completed by the end of the ongoing fiscal. Binani also described the last quarter as the “best months” in the company’s history.
Coworking companies have done well in the first quarter of 2021, despite "office space absorption" overall falling 33% quarter-on-quarter, according to a recent JLL report. This points to a shift towards flexible workspaces.
Rishi Das, co-founder of IndiQube, said he expected the April-June period to be a flat quarter. However, unlike the same time last year, rent collections this year are good as clients aren’t reacting in a knee-jerk manner.
Awfis CEO Amit Ramani said ticket sizes had fallen this quarter as MNCs in particular were reluctant to take decisions. However, the company is betting on demand returning once things open up. The coworking startup plans to go up to 60,000 seats in 3-4 months from 42,000 now, Ramani said.
Smaller players seem to be affected more. AltF CoWorking co-founder Yogesh Arora said that even though vaccinations were providing some hope, the lethal effects of the virus had led to demand being similarly hit as the same quarter last year. My Place founder Vinayak Nath said while discussions were underway with many, the company decided not to take rentals from small businesses and individuals due to the lockdowns, affecting revenue.
However, even small players are expanding. My Place Coworking, which has 600 seats, has another 2,400 under various stages of development, said founder Vinayak Nath.
"Large developers and funds are looking at co-working solutions as an integral part of their portfolios going forward given an increased demand for managed office solutions from corporate occupiers," said Karan Singh Sodi, regional managing director, Mumbai, JLL.
Despite being bullish about co-working, companies are also diversifying their portfolio to bring in additional streams of revenue.
Ramani said 25% of Awfis’ revenue now came from other services and products such as facility management and taking up an existing office and converting a portion to coworking. Recently, the company launched an online portal to sell office-related furniture and accessories.
Indiqube recently launched a managed office service under which it does fit-outs, refurbishes interiors and provides end-to-end services to manage an office, including transport, facility management and technology.
Harsh Lambah, vice-president sales-South Asia at IWG, said the company was looking to bring in differentiated brands into the country. He also said smaller towns and suburban areas were emerging as big growth drivers.
Smartworks’ Binani said the company has developed property-management technology that it has now started selling.
My Place has started a concierge service, through which clients can hire an office boy to carry out tasks such as ferrying files, getting printouts, etc.
AltF's Arora said the company would be launching a product under which users would be able to buy a package of credits for meeting rooms, day passes, lounge access and a business address.
But companies like Awfis, Smartworks, Indiqube, IWG, Dextrus and Incuspaze—and smaller ones such as My Place—are going ahead with their expansion plans, as they expect clients to demand more flexibility once they start making decisions about workspaces. Availability of labour, though, is an issue in carrying out the expansion projects.
“We feel that this quarter will close with at least a 25% dip in business compared to the last quarter—in the worst-case scenario, it could be 50%,” Robin Chhabra, founder of Dextrus, said, adding that in the previous quarter the company was very optimistic. The company even launched a 400-seat office space in Mumbai's Lower Parel in March.
Incuspaze expects a 60-70% fall compared with the last quarter, Managing Partner-India Sanjay Chatrath said. The slump would last only for a short while, he said, as more corporates are restructuring their current leases and looking to move into flexi spaces.
“On our part, we are also getting better deals. It’s a market favourable for tenants and landlords, and developers are extremely flexible,” Chatrath said.
Smartworks said that while decision-making was getting delayed, there was still a spike in inquiries. Co-founder Harsh Binani said that in addition to the existing 65,000-odd seats spread over 4 million square feet, 2-3 million sq ft of office space is under development and is planned to be completed by the end of the ongoing fiscal. Binani also described the last quarter as the “best months” in the company’s history.
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Coworking companies have done well in the first quarter of 2021, despite "office space absorption" overall falling 33% quarter-on-quarter, according to a recent JLL report. This points to a shift towards flexible workspaces.
Rishi Das, co-founder of IndiQube, said he expected the April-June period to be a flat quarter. However, unlike the same time last year, rent collections this year are good as clients aren’t reacting in a knee-jerk manner.
Awfis CEO Amit Ramani said ticket sizes had fallen this quarter as MNCs in particular were reluctant to take decisions. However, the company is betting on demand returning once things open up. The coworking startup plans to go up to 60,000 seats in 3-4 months from 42,000 now, Ramani said.
Smaller players seem to be affected more. AltF CoWorking co-founder Yogesh Arora said that even though vaccinations were providing some hope, the lethal effects of the virus had led to demand being similarly hit as the same quarter last year. My Place founder Vinayak Nath said while discussions were underway with many, the company decided not to take rentals from small businesses and individuals due to the lockdowns, affecting revenue.
However, even small players are expanding. My Place Coworking, which has 600 seats, has another 2,400 under various stages of development, said founder Vinayak Nath.
"Large developers and funds are looking at co-working solutions as an integral part of their portfolios going forward given an increased demand for managed office solutions from corporate occupiers," said Karan Singh Sodi, regional managing director, Mumbai, JLL.
Despite being bullish about co-working, companies are also diversifying their portfolio to bring in additional streams of revenue.
Ramani said 25% of Awfis’ revenue now came from other services and products such as facility management and taking up an existing office and converting a portion to coworking. Recently, the company launched an online portal to sell office-related furniture and accessories.
Indiqube recently launched a managed office service under which it does fit-outs, refurbishes interiors and provides end-to-end services to manage an office, including transport, facility management and technology.
Harsh Lambah, vice-president sales-South Asia at IWG, said the company was looking to bring in differentiated brands into the country. He also said smaller towns and suburban areas were emerging as big growth drivers.
Smartworks’ Binani said the company has developed property-management technology that it has now started selling.
My Place has started a concierge service, through which clients can hire an office boy to carry out tasks such as ferrying files, getting printouts, etc.
AltF's Arora said the company would be launching a product under which users would be able to buy a package of credits for meeting rooms, day passes, lounge access and a business address.
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