Before the global Covid pandemic hit the world, the office real estate sector was teeming with coworking spaces. Numerous companies has started their own shared office spaces or co-working office. Some of these coworking companies were large while others were more like a local kirana store. Nonetheless, the office space was transforming and coworking had started to demand recognition as the mainstream.
While coworking spaces were harboring freelancers, entrepreneurs and start-ups, the world was hit by a global catastrophe in form of the deadly virus. With lockdowns and restrictions on movements to restrict the Covid pandemic, offices were deserted and work-from-home became the norm.
Coworking companies that had managed to get high valuations and investments soon started at a bleak future as the pandemic refused to fizzle out. Many coworking offices were closed as they remained vacant. Facing sudden threat to their existence, the coworking spaces changed their pivots.
When the world started to learn living in the new normal and companies started calling their employees ak to office, the companies who called themselves as coworking spaces started to metamorphose. Individuals and freelancers weren’t looking to come back to office, but bigger companies wanted to resume normal operations even if it was with only a fraction of their staff being in office.
In order to survive, the office space companies have now metamorphosed into “flexible workspaces” and “serviced offices” catering to the demands of the corporate sector. From targeting freelancers and start-ups, they started catering to large enterprises, offering them built-to-suit office spaces.
The share of flex in the total Grade-A office space leasing (in the top seven cities) in 2019 hit a high of 16%. It was the year of historic highs for the Indian office markets. It dipped to 9% in 2020, before reaching 13% in the first three quarters of 2021, though the absolute numbers remain off the previous highs. (Source)
India’s flex space market is gearing for consolidation in the medium to long term. Even though many flex and managed space providers are start-ups, some have attracted healthy venture capital funding and scaled up operations tremendously.