US-based co-working space provider WeWork is readying the launch of more economical centres to boost sales, said a person in the know.
In its upcoming property on the Jogeshwari-Vikhroli link road in Mumbai, a desk will cost between Rs 5,000 and Rs 13,000 a month. The 266,000-sq-ft premises will open next month, and will be among the largest of WeWork's centres with around 4,400 desks.
Wework is also, according to people with knowledge of the matter, looking to launch such economical desks in Delhi and other cities.
To put this in context, it charges users between Rs 18,900 and Rs 42,000 a month at its Enam Sambhav property at Bandra Kurla Complex. At Annie Besant Road in Worli, it charges over Rs 15,000 a month.
The company felt, said the people cited above, that users considered the current rental fees higher than those of others.
WeWork is also entering new cities such as Hyderabad and Pune, and plans to widen its presence in other cities, of which one is Mumbai, said the people. A WeWork spokesperson, however, declined to comment.
The company reportedly took 122,165 sq ft of office space in Panchshil Realty's commercial project, named Panchshil Futura, in Pune. The rent charged stands at around Rs 75 a sq ft. This new centre in Pune, expected to be launched early next month, will have capacity of at least 2,000 seats, they added.
In Hyderabad, it has taken 225,000 sq ft at the Rajapushpa Summit, where rent charged is around Rs 60 per sq ft.
At present, WeWork has 23 co-working centres across the country, with a total of 39,000 seats spread over 3 million sq ft. It has nine in Bengaluru and five in Gurugram (Gurgaon).
WeWork operates in the country in a licensing agreement with the Embassy group. An initial public offering, or IPO, is planned by the company in America, expected to raise $3-4 billion, according to reports.
The management fee it gets in the country is 12 per cent of the revenue — the highest in Asia — according to its regulatory filings with the US Securities and Exchange Commission. It earned $3.5 million in management fees in the six months ended June 30, a 118 per cent jump from $1.6 million in the year-ago period.
According to Colliers International, leasing spaces in flexible workspaces have increased with the large expansion by such operators. In the first half of 2019, flexible workspace operators have leased about 4.5 mn sq ft, a 25 per cent increase from the same period a year before.
Anuj Puri, chairman of Anarock Property Consultants, says traditional office spaces are also seeing good traction, despite the entry of co-working spaces. “It has been estimated that by 2020, the demand for co-working spaces in India will surpass that of traditional office spaces. Nevertheless, while co-working has had its own growth story for the last two years, traditional commercial real estate leasing market in India has also been on an upswing,” he said.