What began almost 15 years ago as a grassroots movement of freelancers, start-ups and solo entrepreneurs seeking to establish collaborative coworking communities has snowballed into a global phenomenon.
Co-working has disrupted traditional occupational office markets and changed the underwriting analysis performed by lenders, operators and capital partners in office and mixed-use assets. Instead of being treated as tenants, users of coworking spaces are treated more as “members”— similar to models more typically found in hotels, time share or gyms.
They have a more limited set of rights to use and access the space, but are also entitled to have easy and immediate access to a range of services, including space booking tools, printing and document processing resources, and phone and internet capabilities, among many others.
It began with a clear rise in the demand for greater work flexibility. Technological and social changes led younger working generations to prioritize collaborative and creative working environments that offered them the freedom to work whenever and wherever, reducing the boundaries between work and social life.
Talking about the industry, the co-working sector has done relatively well in past two years when compared to other sectors in the real estate market. The sector has witnessed impetus growth as it adopts and adapts to the new working trends including flexible work hours and multiple location options to the employees. With the future of work being hybrid and companies embracing this change, the future of co-working spaces certainly seems bright and promising
According to a report by CBRE, the world’s largest commercial real estate space provider, about 86% companies amongst the top 80 companies surveyed across the globe, plan to use flexible office spaces as a key part of their real estate strategies in the future.
India is only second to the US in adopting Flex office solutions. As we just beat UK to become world’s 5th largest economy, the development in Co-working is going to be fueled substantially by a startup culture that is currently a rage in India. Being on the mentor board for several startup incubation centers in India and in Singapore I regularly interact with the founders/cofounders. One thing that is evident by my interaction is for startups in India and globally Co-working players come as natural solution provider for their real estate needs.
There is also a clear trend toward shorter leases, particularly in major cities. Average office lease lengths have been under downward pressure in many mature markets in the United States and Europe, influenced, in part, by the growth of the coworking sector.
While the coworking operator takes a longer lease, members receive the benefits of flexible lease terms, no up-front “fit-out” capital investment and all the benefits that community and technology co-working can provide.
In the uncertain world that we now live in especially post Covid it is evident Co- Working has the capability to be a Market Disrupter in the commercial office space business similar to what UBER did to the Taxi Cab business.