Coworking Fails To Attract Large MNCs Despite Lower Rentals

  • In Europe, large corporates depend on coworking for expansion in both CBDs & suburban business districts
  • In Pune CBD areas (Laxmi Road, Camp, Bund Garden, Koregaon Park, Shivaji Nagar, etc.), avg. monthly rentals per coworking desk 33% lower than conventional office spaces
  • Coworking rentals in IT hub Bengaluru are 20% lower; key areas include M.G. Road, Millers Road, Vittal Mallya Road, Residency Road, etc.
  • MMR coworking spaces come at 14% lower rentals in key micro markets such as Ballard Estate, Colaba, Churchgate, Fort & Nariman Point
  • In Chennai & Hyderabad, coworking rentals in CBD areas are lower by 9% and 10% respectively
  • In Gurugram, flexible workspaces command 6% lower monthly rentals – INR 9,000 – 14,000/desk – against INR 9,500 – 15,000/ desk in regular office space

Apart from flexible work environments and added facilities, coworking spaces provide a substantial cost advantage over traditional office spaces across India’s top cities.

Rental savings amount to anywhere between 6% to 33%. Despite this, Indian coworking fails to attract major MNCs the way it does in many European nations, reveals a recent report by ANAROCK on emerging asset classes.

Individually, flexible workspaces in Pune offer the highest rental difference – as much as 33% against comparable spaces in traditional offices.

The average monthly rental for coworking spaces in Pune’s CBD areas like Laxmi Road, Camp, Bund Garden, Koregaon Park, and Shivaji Nagar hover between INR 5,000 – 10,000 per desk as against INR 10,000 -12,500 per desk in traditional office spaces (assuming 100 sq. ft. per desk for conventional commercial office space).

Anuj PuriAnuj Puri, Chairman – ANAROCK Property Consultants says, “On an average, coworking spaces offer a substantial price difference of 15% over traditional spaces in the top cities. While Pune offers the maximum cost advantage of 33%, Gurugram in NCR has the least at 6%. While start-ups and budding entrepreneurs make a beeline to coworking spaces, large corporates remain wary of depending on them for their expansion. This trend is quite contrary to what is witnessed in developed European nations.”

Despite all the indubitable upsides of coworking spaces, they do have limitations and restrictions. Apart from most of them lacking separate canteens or pantries for occupiers, they also bar corporates from organising events in common areas. Maintenance of these properties is another challenge.

While some large companies do use coworking spaces, these limitations have generally put large companies off the notion of embracing coworking spaces despite the lower rents.

Coworking Vs. Traditional Office – Rental Difference:

  • In Bengaluru, coworking spaces charge nearly 20% lower rentals in key areas such as M.G. Road, Millers Road, Vittal Mallya Road, Residency Road, etc. The avg. monthly rental for flexible workspaces is between INR 7,500 – 15,000 per desk while rents for that for traditional office spaces rent out at INR 10,000 – 18,000 per desk.
  • In MMR, coworking spaces come at 14% lower rentals in key micro-markets such as Ballard Estate, Colaba, Churchgate, Fort and Nariman Point. The avg. monthly rentals in coworking spaces is between INR 18,500 – 28,500 per desk, while for traditional office spaces it hovers between INR 24,500 – 30,000 per desk.
  • In Chennai and Hyderabad, the rentals for coworking spaces in CBD areas are 9% lower respectively. The avg. monthly rentals for flexible workspaces in Chennai’s key areas like Anna Salai, Nungambakkam and RK Salai are between INR 6,000 – 14,000 per desk as against INR 7,000 – 15,000 per desk for regular office spaces. In Hyderabad, coworking rentals in key office areas like Gachibowli, Madhapur, Manikonda and Kondapur range between INR 5,000 – 8,000 per desk, as opposed to INR 6,000 – 9,000 per desk in traditional office spaces.
  • In NCR’s Gurugram, flexible workspaces command only 6% lower monthly rentals of INR 9,000 – 14,000 per desk, against INR 9,500 – 15,000 per desk in regular office spaces. A major factor keeping the price difference between the two low in Gurugram is the massive demand for coworking spaces by the start-ups and entrepreneurs in the CBD areas of the city. Gurugram is one of the major coworking hubs in the country. Also, considering the high demand for commercial spaces in Gurugram, supply for Grade A commercial office spaces is low in the city.
City Coworking (INR/desk/month) Conventional Commercial Real Estate (INR/desk/month) Coworking discounting
MMR 18,500 – 28,500 24,500 – 30,000 14%
Gurugram 9,000 – 14,000 9,500 – 15,000 6%
Bengaluru 7,500 – 15,000 10,000 – 18,000 20%
Chennai 6,000 – 14,000 7,000 – 15,000 9%
Hyderabad 5,000 – 8,500 6,000 – 9,000 10%
Pune 5,000 – 10,000 10,000 – 12,500 33%

Source: ANAROCK Research

Digiprove sealCopyright protected by Digiprove © 2020 Anuj Puri

Leave a Reply

Your email address will not be published. Required fields are marked *