Co-Working Share in Office Real Estate Reaches 27% in Q1 2023, Reports Showed

As the world navigates the hybrid work culture post-Covid pandemic, the demand for flexible office spaces has surged to an all-time high. According to recent reports, co-working spaces have seen a significant rise in demand, with major companies and businesses, including startups, embracing flexible working arrangements that fit with physical offices.

The Q1 2023 data released on Tuesday showed that co-working share in office real estate has risen to 27 percent, up from 14 percent in Q1 2019. Out of a net absorption of approximately 8.2 million square feet across the top seven cities in Q1 2023, co-working spaces had a 27 percent share.

Bengaluru and Delhi-NCR lead the way among the top cities, accounting for 66 percent (about 1.43 million square feet) of net co-working absorption in Q1 2023. Pune and Chennai together saw nearly 0.52 million square feet of co-working spaces absorbed in the same period.

The report also highlighted that many IT/ITeS companies prefer flexible spaces over regular office spaces today, with a strong emphasis on workspace flexibility for employees. This trend has boosted the demand for co-working spaces in cities like Bengaluru, Chennai, and Pune, where relatively low vacancy levels in Grade A offices have further strengthened the demand.

The surge in demand for co-working spaces can also be attributed to the growing number of companies following a hybrid working culture, which involves setting up smaller satellite offices or remote teams using neighborhood, on-demand co-working spaces.

As the trend continues to gain momentum, the report suggests that developers of commercial office assets across the country will align with co-working operators and carve out specialized co-working spaces for them.

Utkarsh Kawatra, Senior Director of myHQ (Anarock Group), said, “Coworking space demand weakened considerably after Covid-19 disrupted the workplace equation across the country. “We’re seeing a decisive reversal of this negative trend now, with coworking particularly attractive because of the disrupted IT/ITeS employment scenario.”

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