Post Covid-19 era: Coworking will be the new normal for work spaces
The past few years have witnessed an unparalleled success for the coworking juggernaut in India. This accelerated growth has stemmed from the revolutionary shift in the Indian traditional workspace to a more flexible, accessible, and affordable coworking space. The present disruption due to Covid-19 is seen as temporary as the coworking industry is expecting a resurgence as the economy emerges out of lockdown. However, medium- to long-term fundamentals remain sound as corporate occupiers seek out alternative options to reduce costs and capital expenditure.
As a result, even the most conventional occupiers are now seeing the merit in co-working. The post lockdown scenario is set to bring in a wave of new opportunities for the co-working players. There will be a lot of focus on distancing measures and communication protocols to ensure a safe working environment.
Flexible workspaces are a practical choice as companies rise up to face the new normal. The key aspect that will favor this segment post-COVID-19 apart from the premium facility management is de-densification. The segment will also see the adoption of high levels of hygiene and other measures that will attract businesses. It will also attract companies previously not exposed to co-working and its benefits. The co-working segment is best placed to cater to these flexible demands.
With the impact of the pandemic taking effect during Q2 2020, a decline in absorption was seen across all the markets. As per a recent report, while the five major cities of Bengaluru, Mumbai, Chennai, Hyderabad and Kolkata saw absorption of approximately 4.42 million sqft office space during Q2 2020, depicting a steep decline of 54% over the absorption observed in Q2 2019, however notwithstanding the crisis at hand, Bengaluru continued to lead the way with 45% share of the total absorption in these five cities.
There are many important factors that explain why coworking will bounce back post-pandemic:
Work from home has its own challenges
While the work-from-home model would have worked well in the lockdown, many companies however may not want it as a culture. Many business verticals and functions still require employees to work in an office setting.
The overall ecosystem needs to be conducive for an employee to be productive while working from home. While WFH may look appealing as a concept initially, yet, in due course, it may impact operational efficiencies and productivity as managing work-life balance for employees might emerge as an area of concern. Work from home may co-exist, but office space will not lose its importance as a strategic tool for corporate culture development and a source of competitive advantage.
Large enterprises will seek smaller spaces
Another win for flexible workspaces will also come from the fact that companies will have to practice social distancing within their campuses, which means they might have to station some employees in different locations. Companies will strive to be agile and prefer to build more flexibility into their real estate portfolios. The current situation will also see larger enterprises seeking smaller spaces to ensure synergized business continuity in the near future. There’s now a lot more interest now in taking dedicated and secure private offices, which is a big shift in the flexible office space industry. As large enterprises look to curb capital expenditure or long-term commitments on office property, coworking spaces will see a surge as they offer flexible infrastructure solutions and also set precedents for safe and healthy practices too.
Coworking spaces offer flexibility
As the professional world returns to normalcy, traditional offices owing to their rigidity will not be equipped to address the new normal. Many companies, even pre-pandemic, have had to deal with the burden of long-term, lock-in leases with heavy security deposits, which take away the ‘business cashflow’ ability to respond to changes in the economy quickly. Now, more than ever, flexibility is crucial and hence co-working spaces, with their natural flexibility and inherent readiness to add value are best positioned to adapt and redefine the future of work and workspace. As companies look to resume business, redesigning and restructuring of existing real estate will pose yet another challenge, however, coworking spaces will be able to respond to design changes required post-COVID-19 quicker and more efficiently than traditional office spaces.
Consolidation on the cards
We can expect more mergers and acquisitions among operators soon as the smaller ones will find it difficult to survive as it is a capital-intense industry. The market, certainly, cannot accommodate hundreds of operators, and large firms will hold sway and garner a larger portion of the market. Smaller players may be absorbed in mergers or will alternatively have to close down operations.
Coworking faster at innovation
COVID-19 has also accelerated the digitalization of workspaces. An innovative technology ecosystem provides flexible and on-demand places to support convenience, functionality, and well-being. To avoid the transmission of germs at workspaces, coworking companies have enabled comprehensive contactless technology and robotic technology that has attracted clients. The traditional desk will likely be non-existent in the coming years with wearable technology, artificial intelligence, machine learning, and the Internet of Things taking over coworking spaces, causing massive disruption and transforming them into autonomous workspaces. Smart access, meeting rooms, and receptions have already forayed enabling cloud-based access system, facial recognition, and real-time security monitoring.
A complete solution, not just a space provider
The pandemic has evolved brands from just being workspace providers to becoming a fully integrated workspace solution platform for their clients which offers products to the entire spectrum of work requirements including co-working, enterprise solutions, and remote working. Coworking players are curating unique experiences and engagements by providing state-of-the-art amenities like gyms, cafés, creches, and managing the complete building ecosystem by bringing alliances, events, and community focus to the occupants.
The inherent flexibility to adapt and adopt, and its ability to foster a strong community spirit determined to win in these trying times will augur well for the co-working industry. The COVID-19 pandemic and the prolonged lockdown have made both employers and employees realize some great benefits of remote work, which has potentially changed the dynamics of workplace usage forever. As the Indian economy is slowly getting back to a ‘new normal’ following the Covid-19 outbreak, each industry is re-inventing its business model to adapt to a post-Covid -19 era.
Sometimes, a crisis also presents an opportunity to make decisions that would be hard to make in more business-as-usual times. Despite the disruption, the focus would remain on managing revenues and increasing productivity, and flexible workspaces will play an even more important role in rationalizing costs and maintaining financial agility.
Co-working space providers are in a unique position to leverage the opportunity and make the segment more attractive for its consumers. Hence flexible workspaces can fit the bill and address the gap with the right blend of safety, sustainability, and cost optimization for any business to grow and change with the current scenario.