How startups can benefit from co-working spaces
Co-working spaces can help startups and professionals save office space costs and eliminate the need to put an infrastructure in place
If you’ve got bitten by the startup bug and are finding the home dining table too small for your growing business, you need to expand out into some office space. The story remains the same for professionals who are on their own, people with small businesses and consultants. The right address is as much a calling card as is your product or service. But the good addresses cost a lot and money is needed to burn on other things like customer acquisition.
According to a report, Co-Working: The Office of the Future, by Knight Frank India, “Real estate expenses make up approximately 9-12% of overall operating costs (can differ from market to market) for an established corporate and could account for more in a startup.”
Where there is demand, trust supply to begin building up. According to a recent report, Who Moved your Workplace, by Cushman and Wakefield, a real estate consultant, “As of April 2018, flexible workplaces occupy more than 8.1 million square feet of space spanning across the top eight cities in the country.”
Co-working spaces are now being offered by several firms across India that can be rented out on an hourly, daily or monthly basis. To give you an idea, if you are an individual professional and need an office to meet your clients occasionally, you can take office space on rent on a daily basis—seats are available at a starting rate of ₹ 300 per day per person, according to expert estimates for smaller firms. If you are working on a project and need the office for an entire month, office spaces are available between ₹ 8,000 to ₹ 10,000 per person per month, said experts.
According to the Knight Frank report, “Besides companies, people such as business nomads, expats or those travelling to the country for a limited period are among those preferring to work out of plug-and-play co-working spaces. Another constituent is the growing volume of freelance workers (gig economy) who support corporate entities with specialised outsourced services in the advisory, consulting and designing domain such as recruiting and advertising.”
What are your options?
You have a variety of options to choose from such as flexible desks, fixed seats and private offices. You can reduce or increase the number of seats or space within the same location as per your need, depending on availability. Price and services differ based on the location and the service provider.
In the last few years, many international and domestic companies have forayed into the co-working space in India. According to the Cushman and Wakefield report, “There are more than 120 operators in the top eight cities offering shared and co-working space, and competition is high. In India, established developers such as Embassy, RMZ have forayed into this space either by partnering with a co-working company or by starting their own services. At the same time, domestic players such as AWFIS, Smartworks, CoWrks, 91 Springboard, Innova8, etc. are ramping up operations at a fast pace, with stiff competition from foreign operators such as WeWork.”
It is expected that the demand for such spaces will only improve in the future. “The potential market size of co-working across India is expected to be 13.5 million users by 2020,” said a research report released on 30 May 2018 by JLL India, a real estate consultant.
What are the benefits?
Cost: Cost saving is the biggest benefit. Apart from ensuring low or negligible cost of setting up an office, co-worker centers also help reduce recurring monthly cost.
According to the Cushman and Wakefield report mentioned earlier, “Costs incurred in a Tier-I co-working space in CBD (central business districts) and suburban locations is 20% lesser when compared to a Grade A 60 square feet traditional office.”
“There is a saving of 5-15% per seat in a co-working space compared to a standard lease,” according to the Knight Frank report mentioned earlier.
Common infrastructure: Apart from providing space to work, these offices come bundled with common support staff like housekeeping, canteen, reception and other infrastructure facilities which is difficult for an individual or small startup to arrange in a small office space.
This helps divide the costs too: you are not required to pay separately for each service, as the overall cost of common facilities and infrastructure is shared among all the occupants.
Flexibility: The other benefit that is driving the demand of such office spaces is flexibility and customisation that they offer. You could choose to work out of a cabin space, open space or even a meeting room. The price varies based on location, facilities and amenities.
Multiple offices: Apart from that, if you have clients, partners or employees in different cities, it may work for you to not have full-fledged offices at all locations. Many service providers offer co-working offices in multiple cities.
These office spaces are better suited for professionals or firms with small teams that need office space in prime areas. According to the JLL report, “Freelancers and small and medium enterprises (SMEs) are expected to contribute 1.5 million users worth of demand, while it is anticipated that startups will demand up to 100,000 seats by 2020.”
Demand for shared offices is not restricted to just metros or tier-1 cities. “The top 6 cities will require an estimated 5 million seats in co-working spaces, while, 8.5 million of the projected demand will be in tier-2 and 3 cities,” said the JLL report.
Before deciding to rent an office space for more than a few days, do ask for a trial period. And,depending on your duration, location preference and terms of lease, negotiate the price.