Are Pandemic-Hit Co-working Operators Ready For Post-COVID Era?
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After being the cream of the crop among up and coming startups, the top billing status of co-working space providers took a hit last year with the WeWork fiasco putting increased focus on business models, and now with the coronavirus outbreak forcing companies to resort to work-from-home arrangements, the pressure seems to have increased again.
Nevertheless, as 'Unlock-1' begins, some believe it is an opportunity for the industry to revive and grow faster than before.
Co-working startups in India, that changed the outlook of Indian offices’ operations, are pulling out all stops and taking precautionary actions to ensure a safe working environment and ensure business continuity for the future.
Amit Ramani, CEO and founder of Awfis, believes the pandemic has evolved their brand from just being a workspace provider to becoming a fully integrated workspace solution platform for their clients which offers products to the entire spectrum of work requirements including co-working, enterprise solutions and work from home.
Though the co-working spaces were empty during the lockdowns, Ramani said the company is expecting growth in the coming months. “We are already seeing an increase in demand in May and June compared with March and April. Companies are now moving away from traditional real estate models, and laying more emphasis on cost optimization, conversion from capex to opex and having more flexibility in rental contracts. As a result, even the most conventional occupiers are now seeing the merit in co-working and partnering with us for different requirements,” added Ramani. The company has also launched its new product, Awfis@home solution, which is an integrated platform enabling distributed work experience its three-pronged approach—The a@h Assessment Tool, The a@h Toolkit and The a@h Tech-enablement.
Co-working leader WeWork India, owned by reality firm Embassy Group, believes that co-working spaces will thrive in the post-COVID era. “The COVID-19 pandemic has affected all industries across the world. In India as well, we first saw a nationwide lockdown and now things are slowly returning to normalcy. We believe that in the future, many companies, depending on their nature of business, will eventually look at reducing their dependence on utilization of office premises and will consider flexible working as a business solution. This provides an opportunity for flexible workspaces, and we foresee a growing demand for them as startups, entrepreneurs and enterprises alike would not want to invest in fixed assets like real estate,” said Raghuvinder Singh Pathania, head of operations, WeWork India.
WeWork India has reopened all its buildings in six cities and is following mandatory government rules for smooth operations.
Apart from fumigating its offices the company has redesigned seating arrangements in its offices. “From a design and seating arrangement perspective, spaces in common areas and conference rooms have been modified to ensure a minimum of six feet distance between two people,” added Pathania.
Talking about the $100 million fund received from WeWork Global, Pathania said, “We will use it to execute our long-term business strategy in India as we see a lot of potential going forward. At the moment our main focus is taking a member-centric approach with health and wellness as key drivers to provide the best possible workplace experience at our existing locations.”
WeWork India is currently providing workspaces with over 60,000 desks in 34 locations across six cities.
SmartWorks’ founder Neetish Sarda is confident that the business will bounce back soon. “Pre-COVID, we definitely had an aggressive approach, but the pandemic has stalled the new businesses moving into our facilities,” added Sarda.
However, he said there has been a significant spike in queries post May 15. In the last few days, SmartWorks has converted around 10-12 deals. Apart from thermal screening, SmartWorks has introduced car cleaning, provided isolation rooms and installed a robot as receptionists in each of their facilities to avoid any physical contact.
SmartWorks had a growth projection of 5.5 million sq. ft footprint in commercial real estate from its current 4.2 million sq.ft, but due to the pandemic, it revised the target and now plans to achieve 5-5.2 million sq.ft by the end of this year.
Sarda said the company will soon sign up another 1 million sq. ft deal.
SmartWorks is currently present in nine cities—Delhi, Gurgaon, Noida, Mumbai, Pune and Hyderabad, among others.
Alok Kumar, founder of Patna-based startup Work Studio Coworking, said that occupancy rate which earlier hovered around 70-85 per cent has now dropped to 30-70 per cent. “We serve a lot of unicorn startups, SMEs and enterprises. A huge number of companies either reduced their workforce or stopped their operations for a while; this has hampered the existing bookings,” he added.
Work Studio Coworking targets an untapped market in tier II cities such as Patna, Ranchi and Indore. He said there has been a spike in new enquiries, but the conversion rate is not impressive because of the ongoing pandemic.
Work Studio CoWorking has reopened all its centre keeping all the essential SOPs in mind. In terms of expansion plans, Singh’s target was to acquire 20 more centres apart from its existing eight centres by the end of 2020. But it now seems difficult to achieve due to the pandemic.
However, he believes that in the post-COVID era, there will be a huge potential in co-working market, and he and his team are preparing to meet the demand in tier-II cities.