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The share of coworking office space will increase to 20% in H1 2022 from 6% in 2021

  • Author: Saphi Evangelarity Syiem
  • 5 min read
  • September 29, 2022
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Following the pandemic, demand for flexible coworking office spaces has skyrocketed, with big corporations and enterprises, including start-ups, increasingly opting for co-working. According to the most recent ANAROCK statistics, co-working spaces accounted for 20% of net absorption of around 20.8 million square feet across the top seven cities in H1 2022. 

In H1 2021, it accounted for only 6% of net office absorption of around 9.33 million square feet.

In contrast, the share of India’s major office demand driver, IT/ITeS, fell from 49% in H1 2021 to 36% in H2 2022. However, this drop is partly because many IT businesses increasingly prefer flexible workspaces to traditional office facilities.

Do not miss Commercial Real Estate Is Booming In 2022: Explore How You Can Also Profit Via This Alternative Investment.

Bengaluru and Hyderabad continued to lead the top seven cities in terms of net absorption in H1 2022, accounting for 50% of the total demand share.

  • The main Southern cities of Bengaluru, Hyderabad, and Chennai saw net office absorption of around 12.2 million square feet. Coworking players accounted for 18% of this total or around 2.23 million square feet.
  • Net absorption in the western markets of MMR and Pune was roughly 5.45 million square feet. Coworking players accounted for 27% of this total or around 1.5 million square feet.
  • It was approximately 2.75 n sq. ft. in the NCR. Coworking players accounted for 15% of this total or around 0.41 million square feet.
  • In Kolkata, just 0.4 million square feet of office space was absorbed. Coworking players accounted for 14% of this total or around 0.06 million square feet.

Coworking spaces have seen a significant surge after Covid-19 upended the prior status quo. One key reason fueling demand is that these spaces are not located only in city centers or major job hubs; they are scattered throughout many places, including densely populated suburbs. Coworking spaces are increasingly available in malls and hotels around cities. Coworking spaces may be found in many big office parks. This allows businesses to stay closer to their employees and provide them with more freedom.

Another benefit of flexible office spaces is that businesses may plug and play at the same cost rather than battling with office layouts and fit-outs. The typical lock-in term for taking up conventional office space is 3-4 years. All of these reasons have contributed to an increase in the demand for coworking office spaces.

 

Cities 

Net Absorption across cities in H1 2022 (in Mn sq. ft.)

% Share of Coworking in each City

NCR

2.75

15%

MMR

2.9

11%

Bangalore

6.1

23%

Pune

2.55

45%

Hyderabad

4.25

13%

Chennai

1.85

15%

Kolkata

0.4

14%

Total

20.8

20%

Source: ANAROCK Research

Coworking Office Space Rentals

Average monthly office rates are growing throughout the major cities, owing to rising office space demand: 

  • NCR and Hyderabad both experienced a 5% increase on avg. monthly office rentals in H1 2022 compared to the same period in 2021. Currently, the average monthly office rent in NCR is INR 80 per sq. ft., whereas it is INR 60 per sq. ft. in Hyderabad.
  • Bengaluru and Pune both showed a 4% increase year on year. By the end of H1 2022, the average monthly rental in these IT clusters was INR 81 per sq. ft. and INR 72 per sq. ft., respectively.
  • MMR, Chennai, and Kolkata all had a 2% increase in average monthly rentals over this period. The average office rental in MMR is INR 128 per square foot, the most among the top seven cities; in Chennai, it is INR 61 per square foot, and in Kolkata, it is INR 53 per square foot.

Office Rental (INR/Sqft/Month)

City

H1 2022

H1 2021

Bangalore

81

78

MMR

128

125

NCR

80

76

Chennai

61

60

Hyderabad

60

57

Pune

72

69

Kolkata

53

52

Source: ANAROCK Research

Coworking Office Space Rental Supply

Meanwhile, the top seven cities saw robust new office supply in H1 2022, totaling 31.8 million square feet. With a combined 74% share, Bengaluru, Hyderabad, and Pune prevailed. Given the large number of new completions, average vacancy levels in the top seven cities increased by 2% in H1 2022 to 15.95%.

Also, read India Among The Top Flexible and Cost Efficient Office Locations in the World: Report.

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