Co-working spaces join hands to negotiate with landlords, utilities

As the covid-19 pandemic threatens to cripple their businesses for months, co-working spaces in Karnataka have banded together to negotiate rents with landlords and tenants, besides lobbying the government for relief.

About 50 co-working spaces, which operate more than 200 properties in Bengaluru, have come together to form the Co-working Association of Karnataka (CAK), said Shesh Rao, co-founder and chief executive officer, Bhive (Tusker Workspace Pvt. Ltd), a member of the association.

“Co-working is one of the industries that has seen a very high impact from covid-19. The reason is that a lot of our own customers, be it MSMEs or startups, have themselves seen a decline in business, and many are unable to pay rent. There are other issues such as negotiating with dozens of landlords and government bodies. The severity of the crisis requires a coordinated response. We have realized that if we don’t work together, our industry can collapse,” Rao said.

Like Bhive, which has raised about $1 million from angel and seed investors, other co-working spaces, including Hustle Hub and Attic Space, have received only small amounts of angel funding, or none at all.

Unlike bigger co-working spaces such as WeWork, these firms lack the capital reserves to withstand a prolonged decline in revenues.

“The overall objective of the association is to make sure that everyone in the co-working ecosystem survives—from landlords and operators, to service providers and tenants. The ecosystem is facing a cash crunch and we need to resolve this urgently,” Rao said.

To ease the cash crisis, CAK is focusing its efforts on three areas. One, it is forming a united front of co-working spaces to negotiate with landlords and convince them to forgo rent payment temporarily.

Two, the association is forming a set of guidelines to persuade better-off tenants to pay rent, while forgoing payments from tenants whose businesses have collapsed.

Three, negotiate with service providers, such as electricity boards and internet service providers, to defer payments or accept lower payments.