Co working offices: With Corona cases slowly declining and therefore the vaccine around the corner in India, one wonders what the impact of Covid-19 has been on office absorption and particularly on Co-working. Just a fast glance at the table below shows that the impact has not been very bad. Despite a decline in Q3 of this year, 2020 is predicted to close at around 25 million sq. ft of office space. Very almost the 10-year average. Co-working spaces are still operating at lower levels compared to pre covid, but this is often mostly due to two reasons. Companies are unwilling to require a risk to employees’ health and have declared work from home till the end of March 2021 secondly due to transportation difficulties. As I write this text, transportation is returning back to normal, but the fear of contracting Covid from somebody else is still there. Below the table, I provide in short a set of pointers as to what is likely to happen post-Covid.
Year Net Absorption
10-Year Average – 31 Million Sq. ft
2021 – 30 to 31 Million Sq. ft (Expected)
2020 – 25 Million Sq. ft (Expected)
2019 – 46 Million Sq. ft
2018 – 36 Million Sq. ft
Situation with Co-Working
- A lot of experimentation and certain innovation to happen with co-working spaces as they will vie hard with each other to woo clients.
- Work-from-home impact on office absorption is probably going to stay for a few years but not permanently. The likely impact would be around 20 to 25% for the subsequent two years.
- The future of co-working looks robust with the average co-working space having doubled during 2020 compared to 2019. The average co-working space was 35,000 sq. ft in 2019 which has doubled to 70,000 sq. ft in 2020.
- It would benefit for co-working firms to focus on Enterprise clients (Well established companies) in the near future to regain stable cash flows.
- Most corporates don’t want capital expenditure on office interiors. The Covid situation has further reinforced this belief.
- Cost cutting at large companies, re-hiring also, and the need for more flexible officing solutions will prompt corporates to look at co-working firms.
- Availability of the vaccine sometime early in 2021 is probably going to boost hiring activity with companies which will in turn directly benefit co-working companies.
- Increased digitization and use of online platforms for various work-related processes might impact co-working companies as they can’t adapt to the new situation overnight. Companies will need to step up efforts to redefine business processes, job roles, and skill requirements to incorporate the use of technology and tools. I see this as a serious challenge for 2021. “WorkifyOffices” as a Deloitte report refers could be a critical component for the future of coworking.
Hope you read it carefully and get your answer. If you are looking for an office then contact us.