Unlike what was initially feared, the need for de-densification, enhanced flexibility in terms of office spaces, design and lock-in periods might just actually end up re-defining the co-working landscape for good. If properly planned, COVID-19 could be a crucial turning point for co-working players in the coming years.
COVID-19 has caused havoc in the economy world-wide and all businesses are reeling under the aftermath of the same. To tackle the economy, India is preparing to relax the lockdown with businesses and offices opening in various cities across the country. Under these circumstances, planning and strategizing on how, when, where, and to what extent to make the shift from working from home to offices is the top priority for companies. This is where co-working players come into the picture. Will companies exit the set-up in woke of shared desks and pantries posing a serious question to social-distancing or will co-working players turn this seemingly difficult situation into a business-redefining opportunity? GRAB.com bureau finds out.
Current situation: COVID-19 vs Co-working
Ever since the country went under lockdown, all businesses have been severely hit and co-working is no different. Market experts across the country estimate a reduction of approximately 30% in business ever since March 2020.
Exits have been witnessed by small start-ups whose businesses were completely uprooted and might not be able to afford a workspace post the lockdown. Such start-ups are expected to continue work from home till they re-establish their business and might use a formal setup only to have face to face meetings with potential clients or team huddles occasionally.
Also, many leases have been put on hold that were to materialise this quarter. However, now with companies resuming work, it needs to be seen how and when demand returns to co-working.
“We are cognizant of the business impact that many of our client companies are facing due to COVID 19 and are empathetic towards them. We have received some downsizing requests from our clients and are working together with them to find an optimal solution that will help them manage the situation in the interim. We are restructuring deals, offering discounts, and helping clients sail through these tough times to the best of our abilities,” states Amit Ramani, Founder & CEO, Awfis.
How are they coping?
The co-working landscape is wide and varied. In the presence of multiple business models and client base ranging from freelancers, start-ups to large enterprises, a uniform solution fits all policy seems unlikely. Every individual player will have to come up with their own waivers and discounts and innovations to cope with the situation. The extent of customization might even seep down to an individual client level.
Most players are offering lease restructuring, waivers in rents and discounted prices to help retain clients.
However, the industry stakeholders understand that monetary discounts are a temporary relief. They will have to come up with long-term solutions if they are to sustain the business of co-working. Two practices that might become popular in the coming months are:
- Product/service Innovations: Companies are reimagining and reinventing their services and product offerings to meet the needs of the current times. Throwing some light on this Amit Ramani, CEO and founder, Awfis says, “We have a suite of mobility solution products for clients who are facing issues. These solutions enable them to utilize our meeting rooms/workspaces as and when they need it. We are also coming out with “[email protected]” product that will help companies (big or small) to assess their readiness of working from home and provide adequate infrastructure (ergonomic furniture, tech solutions) to their workforce to ensure productivity.”
Another big player in the industry Skootr Offices, is also innovating. Commenting upon the same, Puneet Chandra, Director and co-founder, Skootr says, “The current situation demands for a way to reduce costs while maintaining flexibility, and to meet that demand we have developed a ‘reverse office’ model. With our reverse office model, enterprises get tailored solutions that optimally utilize the existing real estate either by consolidation or by monetizing parts of the lease.”
- Evolving client profile: Co-working industry thrived on the diversity of the client base it catered to. From freelancers to big enterprises, it had something for everyone. However, industry experts feel that the client base for co-working will undergo a metamorphosis in the coming months. As smaller start-ups and freelancers might continue to work from home in order to save costs, co-working companies might become largely enterprise driven.
Why COVID 19 might be an opportunity in disguise
Despite, the current lull, the co-working industry is positive about bouncing back. In fact, the common consensus is that COVID might just have presented a unique opportunity.
To begin with, co-working spaces offer flexibility in terms of not having to spend a single penny on re-designing and refurbishing the office spaces to suit the requirements of social distancing. Secondly, in terms of contracts and lock-in periods and number of seats required, co-working offers much more flexibility than a conventional office space.
Moreover, the industry expects a trend of MNCs becoming more open to the idea of having a portion of their workforce sit out of flexible workspaces that provide an ideal middle ground between a ‘distraction-prone’ home setup and a ‘tightly-regulated’ traditional office setup. With coworking spaces, many corporates can provide their employees with the option to choose ‘work-near-home’ in a ‘distraction-free’ and collaborative atmosphere.
Coworking players with large networks will be the first choice as they will allow enterprises to operate under a hub and spoke model and upsize/downsize nimbly as per business demands.
Thus, if co-working spaces are able to realign their business models and utilise their Capex efficiently in designing spaces that cater to social distancing, we might just witness a new era in the co-working space in the coming years.