Co-working spaces set to take over commercial real estate.

Co-working seems to be all anyone can talk about these days. But what exactly is co-working?

As per Deskmag, an online site about co-working, its people and spaces, Co-working is a self-directed, collaborative and flexible work style that is based on mutual trust and the sharing of common core objectives and values between members.

Simply put, co-working is a group of people or companies coming together to share a workspace and the amenities thereof. It started as a way for freelancers and start-ups to collaborate for a productive working space, and soon was tapped into by real estate investors to make it the booming industry it is today.

With the growth of start-ups and self-employment in the current generation, co-working spaces have gained popularity. Millennials no longer want an obsolete work atmosphere with 9-5 timings and standard cubicles. The work culture in India has seen a turnabout as more and more people opt for companies that would provide a work-life balance.

Normally, a commercial co-working space would work by renting out desk space to companies or individual entrepreneurs for a monthly or yearly fee. The rent would differ based on the locality, amenities, equipment and overall atmosphere offered by the co-working space.

Co-working spaces nowadays have an open floor plan, with bright and colourful interiors, casual furniture, free Wi-Fi and state-of-the-art equipments like sound recording room or video recording room. They also offer services like yoga classes, and even a massage! Clearly, a lot of time and effort goes into making sure these spaces have a fun and welcoming atmosphere that increases productivity.

Needless to say, there are many companies and start-ups that opt for a co-working space instead of leasing out a building for their office. According to Economic Times, co-working in India has reported a three-fold growth in the year 2017 and is expected to touch 6-10 million square feet by 2020.

A property owner can enter this market by renting out spaces to co-working operators, or by renting out the space to various start-ups or companies directly.

 Here’s why co-working spaces are the future of workforce, and how it can potentially benefit real estate investors.

  • Work-life balance

“All work and no play makes Jack a dull boy”.

With added amenities ranging from gaming rooms to meditation classes for overall well-being it is no wonder that co-working spaces are preferred by employers and employees alike. Today’s well-informed personnel want to maintain a work-life balance in the sense that they want to be exposed to various other activities in addition to their work. And co-working spaces provide just that with their diverse activities planned to boost the employee morale. Keeping in mind that by 2020, millenials will contribute to 50% of the workforce it is a practical step for well-established companies to switch to co-working.

Statistics like these would naturally nudge a property owner in commercial real estate to at least consider entering the market.

  • Technology

Co-working spaces are designed keeping in mind the dependence on technology in India’s workforce. From hi-tech equipments to cloud access control- they have it all. First-rate security systems ensure that safety is given due diligence. It is definitely the sustainable and smart option for future managements across the globe.

Co-working operations that focus on providing tech-savvy amenities naturally have a higher demand for their space, and thus would charge high-priced membership fees. In such a scenario, if a property owner were to rent out on a percentage basis, it would mean higher revenue with no extra investment.

  • Better Use of Resources

According to a few estimates, co-working spaces generally saves a company an average of 30 per cent of the costs. Comparatively lower priced rental costs and economic operational expenditures are a significant pro for co-working spaces. Moreover, a pre-planned set up ensures that a company can better put to use its monetary resources and invest more time for its core business services. Not to mention, a pre-planned set up ensures smooth working for the employees helping to maximise productivity of its human resources.

For this reason, it can be said that investing in a co-working office is recession-proof. Co-working spaces are sure to be in demand for a significant amount of time in the foreseeable future. If one company decides to move out of a particular co-working office, there will always be another ready to hop on board and take its place.

  • Revenue

In order for a business or company to lock down a respectable office on rent, they would be required to sign a lease for minimum of a year. Co-working spaces provide the flexibility of renting their space out on hourly basis, as and when needed. This provides a great deal of freedom to self-employed individuals and start-ups where the founders and employees are often juggling two jobs at once.

For the property owner this means that the same desk space can be rented out by 2 or more people for different timings throughout the day, thus significantly adding to the revenue.

According to Deskmag, a co-working space can potentially yield two or three times the revenue of a traditional desk space.

  • Locality

The location of an office sets the quality for the future of the business. Whether it be for employees, or potential investors- location matters. At the same time, it is but obvious that to find a space available for office rentals in the prime location of any metropolitan city is a feat of endurance and luck. Sky-rocketing rent prices of commercial spaces have given way to the success of co-working. Now a business can operate from the location that best suits it.

In order to avoid the capital expense of buying a space in a city’s popular area; co-working firms are constantly on the lookout to rent property in such locations. Investing in a prime location property would lead to greater returns if collaborated with a co-working firm.

  • Networking

  A hub of people from different walks of life, working in different companies, each with their own    skill set and ideas- that is what a co-working office is. For an individual entrepreneur or start-up, co-working provides an invaluable asset; networking through direct access to the members. So they would be willing to pay a little extra if it means they can interact with the industry giants.

In addition to this, providing spaces to start-ups can be looked at as an investment. If the said start up takes off and experiences growth in its personnel and manpower, it will end up renting more desk space. This translates to added revenue for a property owner or investor.


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Co-working is the fastest growing sector in India (source; Fortune India), and is rapidly becoming the face of the work environment of the future. Amongst the 153 registered co-working offices in Bangalore, the major players in the market are Wework, Indiqube, Good Works Co-works, 91Springboard, BHIVE and Workshaala. They are changing the face of commercial real estate as we know it.

However, caution must be applied when renting out property to co-working operators. A rising popularity of co-working spaces will lead to extensive competition and over time, could possibly mean failures and subsequent shut downs of small scale co-working operations. Property owners must make certain that they are renting out to the leading players of the market in order to ensure a sound return on investment.

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