Table of Contents
The changing face of workplaces
The world changed in many ways during the COVID-19 pandemic. One of the most significant aspects was the introduction of work-from-home, thanks to lockdowns. That, in essence, started a revolution in the way people looked at their workspace. A spillover was the growth of flexible co-working spaces, Sangeetha Kandavel writes
Luxury and flexibility combined: WeWork India, a co-working company that has entered Chennai recently, picked up space at Guindy. Spanning 1,30,000 square feet, this facility houses over 2,000 desks. WeWork will launch its next office at the DLF Cybercity at Porur by December.
The number of seats at co-working spaces in Chennai has been increasing every month, reflecting the growing trend of companies, businesses, and individuals preferring a flexible workplace environment. Smaller towns in Tamil Nadu are also becoming attractive locations for co-working spaces. The demand for flexible office solutions is increasing in cities like Coimbatore, Madurai, Tiruchi, and Salem, too, thanks to the growing entrepreneurial ecosystems and significant investment. The companies in this space are investing in these cities now. Start-ups, micro, small and medium enterprises, information technology and manufacturing companies, Global Capability Centres (GCCs), traditional industries, and even students are choosing co-working spaces. The trend that peaked during COVID-19 thrives even after the pandemic subsided.
The reason is that the entry-level cost is minimal for co-working spaces, requiring no substantial deposits. These workspaces can be picked up for a day or a week. For a day, the charge varies from ₹500 to ₹1,200, depending on the space, location, and the required infrastructure like conference rooms and projectors. The monthly charges work out to ₹6,500-₹15,000 for a seat in a furnished centre with Wi-Fi, air-conditioning, and light refreshments. “The co-working space model allows businesses to adjust their space requirement easily, saving on capital expenses. It facilitates operation across multiple locations rather than at one place,” says Sanjay Chugh, city head-Chennai, ANAROCK Group. “When you hire a car, you go from point A to point B and get out. You don’t have to buy a car. Much like hiring a car for a trip rather than purchasing one, co-working provides a cost-effective, adaptable solution without long-term commitments,” he explains. He also notes that the big tech parks will continue to co-exist with the co-working spaces.
Today, local and pan-Indian co-working players open offices on Old Mahabalipuram Road, in the Tidel Park Area, at Anna Nagar, Adyar and Nungambakkam, and on Anna Salai in Chennai. According to Jerry Kingsley, Head, Strategic Consulting & Value & Risk Advisory, Jones Lang LaSalle (JLL), the co-working culture in Chennai started gaining popularity in the early 2010s. Some of the early players were Workafella, Hive, Regus, and iKeva. Data gathered by JLL show that the total supply in Chennai is over 1.4 lakh seats, spread across 4.7 million square feet, with 28% vacancy. The next major market is Coimbatore, where more than 16,000 seats were absorbed last year. Tiruchi and Tirunelveli are gaining momentum, though they have lower than 1,000 seats. The key players are Smartworks, WorkEZ, WeWork, Coworks, Cactus, Awfis, Symbyont, Table Space, and IndiQube.
Government steps in
Seeing the popularity of co-working spaces, the Chennai Metropolitan Development Authority (CMDA) is preparing to enter this market by establishing facilities at Anna Nagar, CIT Nagar, and Kolathur. These centres will be operational by December 2025. CMDA Member-Secretary Anshul Mishra says, “We are not competing with the private players. We are trying to bridge the gap for the low income groups, those who can’t spend much on office space. This will be on a par with any professional co-working space.”
There is an unorganised co-working market, too, with smaller operators renting out portions of their office or residential spaces. Builders are including co-working space/office space in their residential projects. “Many developers in other parts of India are doing this. And I also saw this design concept in one upcoming project in Chennai,” Mr. Chugh says.
Utkarsh Kawatra, co-founder, myHQ by ANAROCK, a co-working platform that helps people find and book workspace, notes that many coffee shops are renting out portions of their unused space for co-working. He says he receives at least 200 bookings a day from individuals seeking space on a daily basis. “Anyone who needs a 10-seater or a 500-seater now sees flex spaces as a good option. For teams of more than 200, it may not lead to direct cost-saving, but the ease of not getting capital locked in infrastructure and not making efforts at managing the spaces far outweigh the 10%-20% premium you may have to pay,” he adds.
A risky proposition
Start-ups and clients The Hindu spoke to said investing huge capex in buildings while starting a business is always risky. So they pick up a few seats based on demand at flex spaces. Once the business grows, they opt for bigger spaces.
Prithip Kumar Ramakrishnan, director of AdamsBridge, an information-technology-enabled services company which operates out of WorkEZ, says, “Co-working is much easier when it comes to running operations. From maintenance and electricity to security and housekeeping, everything is taken care of. And this helps businesses like us to focus on operations. In terms of pricing, there is not much of a difference when you look at a conventional space and a co-working space.” He adds, “Currently, we operate out of Anna Salai and we have taken around 240 seats. But, next week, we will be moving to Velachery (WorkEZ), where we have picked up 500 seats.”
Interestingly, most of the co-working spaces are helping companies migrate to bigger spaces like a managed workspace. Managed office space is a flexible workspace solution: a company leases an entire office or a portion of an office that is fully serviced and managed by a third-party provider. Most players in the co-working spaces in Tamil Nadu are also into managed office space. Managed offices cater to businesses that have outgrown co-working space or serviced office spaces but still desire flexibility and convenience, seeking a dedicated space of their own.
An expanding market
In the past three months, major co-working players have entered Chennai, while the existing ones have expanded. One of the recent entrants is WeWork India, which has picked up space at Guindy. Spanning 1,30,000 square feet, this facility houses over 2,000 desks. It is a luxurious workspace. Firms such as Wheelocity Fresh Private Limited, Molex India Pvt Ltd, Dr. Wamser + Batra India Private Limited, and H2O LLC operate from this space. WeWork will launch its next office at the DLF Cybercity at Porur by December this year.
Workafella, which started operations in Chennai from a centre on TTK Road, Alwarpet, in 2016, now has five centres, with 4,600 workstations spanning over 3 lakh square feet. Gurbinder Rattha, founder and managing director, Workafella, says, “We are looking to double our footprint in Chennai in the next year and a half.”
“We are currently in an advanced stage of discussions in Coimbatore, and we are targeting over 2,000 workstations this fiscal. Subsequently, we will be looking at Madurai, Tiruchi, and Hosur. We see a potential for adding another 3,000 workstations across Tamil Nadu in coming days,” he adds.
The Bengaluru-headquartered Table Space, which entered the Chennai market in 2022, has introduced newer formats and expanded its footprint across Chennai. From around 1,20,000 square feet at KRC Commerzone, it now has approximately 8,00,000 square feet. “We recently added 6,60,000 square feet across two new properties: Mapletree Global Infocity Park and DLF Downtown, Taramani. This expansion represents an approximately ₹500 crore rental commitment over the next five years,” says Vaibhav Joshi, Executive Director, Table Space. “Table Space plans for the Chennai market involve addition of 8,00,000-1 million square feet over the next two years,” he adds.
Tier 2/3 towns
The co-working space providers are targeting tier 2 and tier 3 towns in Tamil Nadu. After Chennai, Coimbatore is the next major centre. In the past year, the demand for co-working space has surged in Madurai and in smaller towns like Tirunelveli. Experts say that as investment flows into the southern districts, the demand for co-working space is set to rise. A real estate player in Madurai notes that some of the major companies which have signed deals with the State government at Global Investors Meet 2024 have settled their teams in co-working spaces. “They will transition from these spaces once their offices are fully established.”
Shyam Sundar, founder and CEO, GoFloaters, an aggregator of flexible workspaces, cites an example of how companies first settle for a co-working space and then expand. “A Dubai-based oil and gas company chose Madurai to establish a low-cost back office centre and leverage the local talent pool. It started out with 10 seats, and plans to increase the number to 50 in the next six months,” he said.
IndiQube, which has substantial presence in Chennai, is also present in Coimbatore and Madurai. It has three properties in Coimbatore, on Avinashi Road and at Saravanampatti. Together, they amount to over 2.3 lakh square feet. In Madurai, it has one property of 35,000 square feet. The company is planning to increase its presence in these cities.
Harsh Lambah, Country Manager-India, IWG, says, “We are aggressively expanding in Coimbatore. We are also looking at Madurai and other places. Because tier 2 is a big opportunity for us and a great success story, especially after the pandemic.”
WorkEZ, one of the biggest players in the co-working space in Chennai, is eyeing the Coimbatore market. Sunil Reddy, its co-founder and chairperson, says, “WorkEZ has leased a 1,00,000-square foot office building at Saravanampatti, Coimbatore’s information technology hub. The project is under development. It is expected to open by the fourth quarter of 2024.”
Another real estate player says some regional players are betting on the concept in the Hosur and Salem regions. “These smaller players have repurposed office spaces or large buildings into co-working spaces, believing that they can monetise these assets by turning them into workspaces rather than leaving them vacant,” he says.
“Hosur is home to numerous manufacturing and ancillary units. With Ola setting up a large plant in the area, suppliers and vendors needing proximity to the factory are opting for these workspaces,” Mr. Chugh adds. Mr. Sundar, of GoFloaters, says the trend has gathered pace in Salem and Tiruchi, with local players offering co-working spaces. “We also have players like Mikro Grafeio that work with the Global Capability Centres to set up their workspaces in tier 2 and 3 cities. They already have centres in Tiruchi, Madurai, Salem, and Tirunelveli,” he says, adding that the pandemic has brought many experienced professionals back to their home towns, and they are turning entrepreneurs.
Read Comments
- Copy link
- Telegram
READ LATER
Remove
SEE ALL
PRINT