Co-working companies are uniquely positioned to lead the transformation into Real Estate as a Service. Since the introduction of the concept to India in 2015-16 co-working spaces have been growing exponentially, relative to traditional real estate. Anarock reports that the absorption of co-working spaces has grown to 27% of total commercial real estate absorption in Q1 2023 vs. 14% in Q1 2019.
Catalyzed by the pandemic, one of the most popularly cited advantages is the flexibility of the model. Companies were accustomed to investing heavily on capex and by virtue of that investment be compelled to enter into long-term lock-ins. While it is almost certain that companies will continue to invest in this model for key locations (headquarter locations, key development hubs, R&D locations etc.) there are an increasing number of CRE leaders in these companies looking to add co-working locations into their real estate strategy. For companies that need small office locations in different destinations, or options to be closer to their employees co-working spaces offer a flexible plug-and-play model that allow companies to ramp-up or reduce the number of seats with a much shorter lead time.
This trend is being borne out by a widely reported shift in customer type. Traditionally, the preserve of the startup, co-working spaces are now seeing take-ups increasing from large MNC companies. These companies are occupying fully serviced, built to suit spaces fully operated for them by co-working companies. The rise of the managed office solution is driven by the simplicity of use. Instead of having to identify a space, design and build and subsequently manage; all this effort is managed by the co-working operator. This has democratized office spaces to the degree that a company can offer their employees a premium, well-designed, fully serviced space without having to manage a complex set of vendors and navigating regulatory requirements. Like the early days of online aggregators in the travel industry, co-working spaces are seeing the emergence of online aggregators, making finding the right workspace for you more accessible than ever before.
Technology is a key area of investment for co-working operators. Offering a completely digital workspace experience including booking meeting rooms, mobile access and requesting for help/support is consistent across operators. They are also investing heavily in technology to help their customers manage a hybrid work culture. Employee of customers are now able to book seats, be made aware of when their key collaborators are physically in office, among many more features that allow customers to optimize their workspace utilization.
Studies demonstrate how a vibrant, ‘amenitized’, experience driven workspaces are becoming increasingly critical to employee acquisition, engagement, and retention. Co-working space operators have always had great design at the core of their value proposition. Workspace design isn’t about desk and chairs any longer; creating spaces that foster collaboration, allow for focused work and provide informal ‘third places’ to employees to put their feet up on the sofa as they would do at home; partially remove the inconvenience attached to the commute to the office. Learnings from managing millions of square feet of workspaces allow co-working operators to be experts in office design. The art (well-designed vibrant spaces) and science (data-driven insights on utilization and collaboration to focused space ratios) of office design are uniquely married together by co-working operators.
Co-working spaces are due for a rebrand to serviced workspaces or real estate as a service as they continue to build expertise on design, technology and employee experience while leaving companies to focus on their business without distraction.
