Demand for flexible office spaces has hit a new high after the pandemic, with major firms and businesses, including start-ups opting for co-working. According to the latest ANAROCK data, out of a net absorption of nearly 20.8 million sq.ft across the top seven cities in India in H1 2022, the share of co-working spaces stood at 20 per cent. The share was only 6 per cent of net office absorption of 9.33 mn sq.ft back in H1 2021.

However, the share of IT/ITeS sector – India’s leading office demand driver – declined from 49 per cent in H1 2021 to 36 per cent in H2 2022. This decline is largely because many IT firms are now also preferring flexible spaces to regular office spaces, the data revealed.

In terms of net absorption across the top 7 cities in H1 2022, Bengaluru and Hyderabad remained on top, comprising 50 per cent of total demand share.

Among the cities in South, Bengaluru, Hyderabad, and Chennai witnessed net office absorption of about 12.2 mn sq.ft. Of this, 18 per cent or 2.23 mn sq.ft. was by co-working players.

In the western markets, MMR and Pune saw net absorption of nearly 5.45 mn sq.ft. Of this, 27 per cent or 1.5 mn sq.ft. was by co-working players. In the NCR, it stood at about 2.75 mn sq.ft. Of this, 15 per cent or approx. 0.41 mn sq.ft. was by c-oworking players.

In Kolkata, merely 0.4 mn sq. ft. office space was absorbed. Of this, 14 per cent or 0.06 mn sq.ft. was by co-working players.

Anuj Puri, chairman ANAROCK Group, said, “Co-working has received a major boost after Covid-19 disrupted the previous status quo. A major factor driving demand is that these spaces are not concentrated in just the city centres or major employment hubs; they're spread across different areas, including the housing-intense suburbs. Co-working spaces are now also operating out of malls and hotels across cities. Many large office parks are also housing co-working spaces. This helps companies to remain closer to their employees and offer them flexibility.”

Another advantage is that with flexible office spaces, companies can plug-and-play at the same cost rather than wrestling with office layouts and fit-outs. The lock-in period for taking up a regular office space is anywhere between 3-4 years. All these factors have also helped boost the demand for co-working spaces.

 

Cities 

Net absorption across cities in
H1 2022

(in mn sq. ft)

% share of
co-working
in each city

NCR

2.75

15

MMR

2.9

11

Bangalore

6.1

23

Pune

2.55

45

Hyderabad

4.25

13

Chennai

1.85

15%

Kolkata

0.4

14

Total

20.8

20

Data: ANAROCK

Office rentals

Backed by rising office space demand, average monthly office rentals are also seen to be rising across the top cities. NCR and Hyderabad each saw a 5 per cent rise in average monthly office rentals in H1 2022 compared to same period in 2021. Currently, the average monthly office rents in NCR are at Rs 80 per sq.ft, while in Hyderabad it is Rs 60 per sq.ft.

Bengaluru and Pune each saw a 4 per cent yearly rise. The average monthly rentals in these IT hubs by the end of H1 2022 stood at Rs 81 per sq. ft and Rs 72 per sq. ft, respectively. MMR, Chennai, and Kolkata saw a 2 per cent rise each in average monthly rentals in this period.

In MMR, the avg. office rentals are the highest among the top 7 cities at Rs 128 per sq.ft, in Chennai it is Rs 61 per sq.ft, and Kolkata has the lowest at INR 53 per sq.ft.