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Will the growth of co-working space slow down?

Goutam Das     May 8, 2019

Co-working or flexible workspaces are growing at a scorching pace in India. There are over 300 operators. Nevertheless, according to at least one report, released this week, this growth could slow down a bit from now on.   

First, the growth numbers from the first quarter of 2019.

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Real estate consulting firm CBRE, in its latest report, stated that the overall flexible space take-up in India increased by whooping 277 per cent to 2.9 million sq. ft in the first quarter of this year versus the year-ago period. On a sequential basis, this represents a 70 per cent increase. Most of the growth is stemming from two regions in the country - Bangalore and the National Capital Region (NCR) - the two accounted for more than half of flexible space leasing in the country.

The report further added that flexible space operators were shifting focus towards leasing medium to large-sized spaces (20,000 to over 100,000 sq. ft.), which reflects the confidence in the co-working segment. Across cities, larger corporates are opting for co-working and not just start-ups. CBRE expects this interest to sustain even in the future.

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Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, of CBRE noted in a statement: "Given that the Indian flexible space market is one of the biggest across APAC, we anticipate that this segment will remain high on the investor radar as well. We expect that the leasing quantum of this segment would marginally rise from about 7.1 million sq. ft. in 2018 to about 10 million sq. ft. by 2020."

A report from Colliers International, a real estate services and investment management company, however, suggested a slowdown of this growth - this, of course, does not mean that the co-working trend wouldn't be in fashion.  

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"Flexible workspace operators have made particular inroads into Indian urban markets. As per Colliers Research, the sector accounts for 15 per cent of total Grade A office space in prime areas of Bengaluru, and for at least 6 per cent in the NCR agglomeration," the company stated.

"We believe that flexible workspace is now fully established as an occupier sector, serving an important market niche. While growth rates in the sector may slow from now on, we do not expect the trends to go into reverse," it said. Colliers sees growth potential "at the premium-end of the flexible workspace market, especially for those operators focusing on provision of amenities and hospitality-related services."

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