In recent years, India’s commercial real estate markets have experienced significant growth, driven by the emergence of innovative investment models such as flexi, fractional, and co-working segments.
In particular, the rise of co-working and managed office spaces has reshaped the landscape of the Indian commercial real estate market in recent years. This change has benefited all stakeholders, including corporates, freelancers, startups, builders, and property owners. Larger corporations have also rethought their real estate strategies in light of this trend. Landlords and office owners are enjoying rewards for their investments.
Pratyush Pandey, CEO of Upflex India, shared insights on the rising trend of co-working spaces and their benefits for landlords and office owners.
“In the past couple of years, the surge in popularity of co-working and managed office spaces has revolutionised the traditional commercial office market and that too for good reasons. This change is not only benefiting freelancers and startups, but larger corporates who have started to rethink and realign their real estate strategy.”
Landlords, office owners are reaping the rewards
Due to this change, he said, landlords and office owners are also reaping the rewards and this change is transforming the commercial real estate market which is becoming a mutually beneficial arrangement for all three – operators, occupiers and landlords.
In the earlier days, landlords and office space owners had to depend only on mid- to larger-sized occupiers and there were no takers for the mid to smaller units whereas co-working spaces allow landlords to make the most of their properties by subdividing larger areas into smaller, rentable units. This agile approach to space allocation means that even unconventional or underutilised properties can become lucrative assets.
On how co-working spaces appeal to a diverse array of occupants and minimise vacancy risks for landlords, Pandey said unlike conventional office leases, which often involve long-term commitments from single tenants, co-working spaces attract a diverse range of occupants. From freelancers and small businesses to remote teams and corporate satellite offices, the tenant mix is dynamic and varied. This diversity cuts vacancy risks and ensures a steady stream of rental income.
“Co-working spaces typically offer flexible lease terms, ranging from daily passes to monthly memberships to its customers. This adaptability appeals to tenants seeking short-term solutions or scalability options. Landlords benefit from this agility by quickly adjusting to market demand and optimising rental yields,” he asserted.
Co-working spaces present opportunities for landlords
Beyond traditional rental income, co-working spaces present opportunities for landlords to generate ancillary revenue. This can include partnerships with service providers, such as food vendors, fitness facilities, or business support services, further diversifying the property’s revenue streams, he further added.
The rise of co-working spaces can enhance the overall value of a property as well-designed and amenity-rich co-working environments attract higher-quality tenants and command premium rents. Additionally, properties with established co-working operators may experience increased investor interest and improved resale value.
With the growing demand for coworking spaces today there are more than 800 different operators spread across 95 cities in India consuming approximately 50 million sq/ft of space who are managing and operating such spaces of these landlords and commercial office space owners.
A symbiotic relationship between landlords and office owners
The rise of co-working spaces represents a symbiotic relationship between landlords and office owners. By embracing this trend, property owners can unlock new revenue streams, optimise space utilisation, and create vibrant communities within their properties. As the demand for flexible workspaces continues to grow, co-working is destined to reshape the commercial real estate landscape.