Mumbai, November, 30, 2017
– The flexible office/coworking space industry has gained traction in India, in the past few years, and will become a separate asset class in the real estate sector. Although, the Silicon Valley of India, Bengaluru is leading with maximum number of flexible spaces (35%), the financial capital, Mumbai is also catching up and accounts for almost 18% of the total number of flexible office locations in India.
Moreover, absorption of flexible offices has doubled since last one year in Mumbai from 0.38 million sq ft in 2016 to 0.6 million sq ft in the first nine months of 2017
. By 2018, we are expecting a few major transactions to conclude in this segment.
“The flexible/co-working space has proven to be a disruptor and an asset class in itself with offerings that meet the gaps in the expectations for corporates to address flexibility, scalability without liabilities or baggage (expansion and contraction), effective cost savings and gaining efficiency in operations. The facility will provide people with a work environment that they deserve and aspire for, and address critical factors of image, belongingness and community. The offerings also serve individuals, professionals and companies of all sizes, be it startups or an established organization with small or large size of operations”, says Ravi Ahuja, Senior Executive Director, Mumbai & Developer Services, Colliers International India.
In a bid to ensure space efficiency and cost effectiveness, occupiers in Mumbai are embracing the coworking trend. Affordable and convenient, flexible offices have struck a chord with various types of occupiers. To cater to this increased demand, various local coworking operators have expanded at a rapid pace and received funding from marquee investors. In Q1 2017, one of the largest coworking space provider in India, Awfis raised USD20 million from Sequoia Capital, which is being considered as one of the biggest fund raising in this segment.
In Q3 2017, coworking space accounted for 31% in total gross office absorption. We expect this trend to continue in Q4 2017 as coworking players such as iKeva and Avanta have recently announced expansion plans. In addition, Innov8, a leading coworking player, launched a coworking facility of 10,000 sq ft in Andheri East in Q3 2017. Keeping up with the current trends, we expect coworking share in total absorption to increase by 10-15% in upcoming quarters.
Mumbai leasing has predominantly been ruled by the banking, financial services and insurance (BFSI) sector. Although, the BFSI companies are still primary occupiers in Mumbai, in recent years, demand from technology, telecom, consulting, logistics, warehousing companies along with coworking operators has intensified. Increasing number of companies are looking for medium sized, efficient and cost-effective solutions. Flexible offices/coworking spaces can act as a solution and occupiers can harness their potential in different ways to mitigate rising rents and shortage of space in popular locations, especially Mumbai.
Looking ahead, we expect that both international and domestic players in the flexible office domain will establish presence in central, suburban and peripheral districts. Currently, flexible offices have a strong presence in most major commercial districts of Mumbai namely BKC, Andheri, Powai, Vikhroli, Lower Parel and Navi Mumbai.
The footprint has increased tremendously in the last one year and we expect flexible offices to make their mark across all major Mumbai micromarkets.
About Colliers International Group Inc.
Colliers International Group Inc. (NASDAQ and TSX: CIGI) is an industry-leading global real estate services company with 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customised research; and thought leadership consulting.
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