Assessment of Business Viability in Co-working Office Spaces in India – A Study from the Provider and End-user Perspective

Abstract

Co-working space is an office sharing arrangement where people from varied professional backgrounds, interests and companies work in the same place. They are primarily utilized by independent workers, freelancers, entrepreneurs, typically anyone looking for collaboration, work flexibility and base services like internet, food and office support.Co-working space concept pre-dominantly started and evolved in the US and picked-up in many countries. A report by Intuit, a software service provider, says that over 40% of the workforce in the US will be either freelancers, temporary, part-time or self employed by 2020. As per the NASSCOM India report, the number of start-ups in India has crossed 4,200 in the year 2015 and by 2020 there will be more than 11,500 start-ups in India. With the advent of start-up revolution and international companies establishing base in India, co-working trend has picked up in the commercial real estate boosting demand for such office spaces. Options are available to the Indian entrepreneurs to choose within cities like Delhi NCR, Bangalore, Hyderabad and Mumbai. More than 100 co-working spaces have come up in India in the last three years and numbers are rising.Now, the big question is are the co-working spaces profitable? If co-working space providers can sustain their business model in the long term?The primary purpose of this paper is to assess the business viability of co-working office space in India and to identify the key factors for a profitable co-working space from the provider and end-user point within Delhi NCR and Bangalore geographies. Bangalore being more evolved and active co-working space and start-up hub in India and Delhi NCR being the upcoming co-working space hub, the two cities are chosen for the purpose of study.The paper aims to study the effect of revenue models, rent models, age of the space, number of members, capacity utilization, value-added services, location, ambience, user profile on the overall profitability of the co-work space and on the decision of end users in the two cities.Two questionnaires, one for the service providers and the other for the end users in the two geographies are designed. The primary data collected is supported with secondary research from news articles, journals, publications and white papers for the purpose of analysis. The research results can be used as a reference for making investment decisions in co-working office space segment within Delhi NCR & Bangalore.