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Coworking firm The Office Pass will open three new centres in Delhi-NCR comprising up to 900 desks by March next year and is considering taking over operations of some facilities that have shut due to the COVID-19 pandemic, a top company official said.

The Gurugram-based startup, which was founded in 2017 and currently has seven coworking centres with around 1,500 desks, is looking to expand business as it expects demand for flexible workspace to grow post pandemic.

"The COVID-19 pandemic is making companies re-think their cost structure. Organizations are looking at ways to conserve cash. Currently, office rent is a major cost element for a company," the company's founder Aditya Verma told PTI.

This trend is definitely moving towards flexible or coworking offices that helps companies scale up and down as per business condition, he said, adding that the coworking segment has been impacted like any other businesses because of COVID-19.

"Our occupancy level has come down to 41 per cent from 78 per cent pre-COVID-19. We break even at around 60 per cent. Thankfully, we have got relief from landlords which we are passing on to our clients," Verma said.

He said the company is offering free desks for 30-45 days to gain new clients. It charges between 6,000 and 11,000 per desk per month.

Being confident of strong revival in the coworking segment in the next six-nine months, Verma said: "We are preparing ourselves for this opportunity. We will open three new offices by March 2021 in Delhi-NCR which will add 750 to 900 seats to our capacity".

The slowing economy, large scale reduction in headcount, WFH (Work From Home) by IT and ITES companies is putting a downward pressure on commercial office rentals, he said.

"With high vacancy rates, commercial property rentals in most Indian cities have corrected by 7-10 per cent. Smart companies are re-negotiating harder to get bargain deals that are 15-18 per cent lower than the pre-COVID-19 levels. This is a short-term trend and may last for next 8-10 months," Verma said.

On consolidation in the coworking segment, he said those operators who were unable to achieve unit economics positive status pre-COVID-19 would find it extremely difficult to sustain the current period of low volume and growth.

In the past few months, he said, as many as 13 coworking centres have shut in Gurugram only.

"There are attractive opportunities which we are considering. Based on the attractiveness of terms, we may take over operations of one-two such offices. This will give us a head start and position us well when the tide turns positive post-COVID-19," Verma said.

Leasing of office space hit an all-time high in 2019 calendar year, with gross absorption touching around 55-60 million sq ft while net leasing at around 45-50 million sq ft.

Rise in demand of flexible workspace has been one of the major driving forces for strong office leasing last year. Coworking operators took almost 15 per cent of the total office space leased last year.

However, property consultants are of the view that office demand in 2020 calendar year will decline by 30-50 per cent due to the outbreak of COVID-19 that forced corporates to defer their expansion plans. PTI MJH ANS ANS

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