8 Trends Emerging In the Shared Economy Space
Most enterprises are going to focus on spaces that meet the norms of social distancing and are able to give highest quality infrastructure, safety, hygiene and privacy
Shared economy is the future, and shared spaces—co-working, co-living, villas, and houses or hostels—will be the way we will live in the times to come. In the short term, all these industries are impacted but in the long run post-COVID, the shared real estate spaces will flourish and witness high growth.
There are eight top trends that are emerging in co-working and co-living spaces. Social distancing is now going to be a way of life. Most enterprises are going to focus on co-working spaces that meet the norms of social distancing and are able to give the highest quality infrastructure, safety, hygiene and privacy; they would win the game in the long term.
Hygiene and sanitation will become the top priority
Ahead of location and rental values, it will be the hygiene, cleanliness and safety that will become the number one priority for tenants in both co-working and co-living spaces, and this will further extend to travel as well. Highest levels of cleanliness and hygiene would not just be a stop-gap arrangement for a tenant but will be the top ask. For migrants livings in big cities, it will also be the number one priority. People would look for value-added services from co-working and co-living spaces and would look for brands that could help during emergencies. For shared spaces, investing in handles-free doors motion lights and motion sensors would be an additional investment to be made. An increase in the frequency of regular and deep-cleanings and sanitizing in co-living and co-working would be a must-have. The places would have to keep plenty of antibacterial gel in every corner, as well as sanitizing wipes that members can use to disinfect their individual work surfaces and computers and sleeping quarters. In the future, shared spaces that can promise these facilities may be able to command a premium of up to 50 per cent for hygiene, security and convenience offered.
Making spaces less dense
It is no more about how dense a co-working space can be as it was the case pre-Covid. Earlier it was one seat in 60-70 sq. ft, but with social distancing norms, it will go up to 85-100 sq. ft. Work from home may not be a suitable option for India as we do not have adequate infrastructure in our homes. Margins will drop for co-working spaces in the next quarters. However, in the long-run opportunities can rise up by 50-60 per cent for co-working spaces.
Rise in B2B and enterprise clients
Billed-to-company, as opposed to billed-to-Individual, would see a drastic increase in the coming months for shared spaces. This earlier used to be about 10 per cent of the business but will see a significant increase by 20-30 per cent in the coming six months. Enterprises that were earlier looking for 1,000 seats in one place today demand 300-350 seats across four locations and spread across geographies. Enterprises, particularly in IT sector, would want to know where their employees are staying and whether they have adequate hygiene and infrastructure at their homes.
New Business Models
Companies will be more concerned about where their employees are staying and coming from. Employees will prefer to live close to corporate parks and CBD's to avoid long-distance travels within the cities on public transport. Integrated campuses have already started to happen in the Bay Area. There would be new micro markets emerging where employees can stay there and then walk to the office. There would be many new business models that may begin to emerge as companies would not want their employees to be at any health risk. Co-working and co-living together might be another new trend coming up as uptake of work from home where facilities are accordingly designed within one building.
Unorganized vs organized spaces
From a tenant's point of view, the buzzword is flexibility. Earlier norm of 11-month contracts may not be popular anymore. People will be looking for flexible arrangements of a quarter and will be ready to pay a premium for it. It will reduce the demand for unorganized PGs to more organized players with more brands that promise the highest standards will be evolving the fastest. Also, brands that will be changing their position, and become more open and friendly will grow significantly.
Proximity to workplace
There will be a rise in demand for co-living and home locations close to IT hubs. Now, they can command a premium. Most of the millennial in the age of 22-32 use co-living spaces. A 2-km distance from IT park gates may become a good parameter for housing. A 15-minute walk from the workplace will be another emerging trend. Rental housing associations have also shared with industry new protocols for cleaning, garbage disposal, and safety going forward and facilities that stick to these guidelines will be better positioned.
Rise in acquisitions
In shared spaces like co-working and co-living, more acquisitions may begin to happen now as for big branded players to meet the increasing business demand and to meet business continuity demands need to give clients multiple locations to their clients as opposed to housing them in one place. Today, there are about 400 big and small co-working spaces in India. There may be more inorganic growth by bigger players to offer. Consolidation was already on the cards pre-COVID, and now brands who have the capital will acquire smaller players.
Hostels and hospitality
Travel may take a while to pick up but the industry is planning ahead. As an industry, it has to service a come and go audience. Travel is an outcome of a safe society. Location was the USP earlier, but today it will be hygiene first and service next. High-quality infrastructure and privacy will be important for customers. Long stays or alternative days of stay will form the re-booking norms. Training of on-the-ground staff would need the highest assurance and travelers may prefer secluded places rather than over-crowded tourist spaces and will like to have the whole place to themselves during vacations.
<iframe width="560" height="315" src="https://www.youtube.com/embed/75E44iQAw7w" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>