Co-working spaces likely to receive $400 mn investments by 2018: Experts

The momentum gained by co-working spaces in 2017 is likely to continue this year as well, as large corporates look at consolidating businesses to maximise their productivity, said experts.

According to a study by Jones lang LaSalle (JLL), co-working is expected to receive investments worth $400 million by 2018. The potential market size for the segment across the country currently stands in the range of 12-16 million seats.

“The demand for co-working spaces is no longer only limited to freelancers or start-up employees. The staff at small emerging businesses as well as large corporate offices are also looking to co-working spaces to maximise their productivity,” said Ramesh Nair, CEO and country head, JLL India.

While freelancers are primarily focussed on the cost factor, start-ups and small and medium-sized enterprises focus on cost as well as infrastructure. For large corporate firms, travel convenience is a high priority, and hence the prime office location is important as is infrastructure, he said.

Samantak Das, Knight Frank India chief economist and national research director, said that co-working space is witnessing an increasing momentum as seen in not just the volumes of space taken up but also the diversity of players that are now queueing up to serve occupiers in this quality-starved office space market.

“In 2018, the shrinking availability of quality-leased office assets coupled with yields reaching historic lows will push investors to look at alternative segments like retail and warehousing. On the other hand, signing built to suit deals will become imminent for office occupiers,” he said.
 

Sahil Vora, realty services provider SILA founder and managing director, said that co-working spaces have led to a significant supply in many micro markets and more planned for 2018.

“In the next couple years, we expect few large players to dominate and consolidate each market, which may lead to a painful exit for smaller players. The increased competition may also squeeze margins until the sector consolidates,” he added.