Coworking Space

Co-Working Spaces Attract PE Funds

Co-working has emerged up as a popular business model that is redefining office spaces across India. Such spaces are in great demand in metros as they provide the necessary support, infrastructure, networking opportunities and office facilities to entrepreneurs who are just starting out.

This year has witnessed a massive uptick in the growth of the co-working industry to the tune of 40-50 percent. From just 80 in 2016, the number of such spaces has jumped to a whopping to 350 (400 percent) this year. Given this spectacular growth, private equity (PE) firms are betting big on this segment.

Sunshine sector

Earlier this year, Awfis, one of the country’s largest co-working space providers raised $20 million (Rs. 130 crore) from Sequoia Capital. Another big name in this space, Smartworks, is also in talks with PE funds for raising capital to fuel expansion. The company is looking at raising over Rs. 100 crores apart from leveraging the expertise brought by PE funds.

Domestic players such as Awfis and Smartworks account for a large share of the co-working space market in the country. But international names are also entering this promising segment and offering stiff competition. WeWork, the US-based shared office space behemoth recently forayed into the Indian market and signed an agreement with the Embassy Group to develop a co-working facility in Bengaluru with an investment of $100 million.

Growth plans

Sensing future opportunities for co-working spaces, Awfis plans to expand to Chennai and also venture into Tier-II cities like Jaipur, Chandigarh and Indore. The company aims to expand to two million sq. ft. by March 2018 and to 3.5 million sq. ft. by December 2018. Smartworks also plans to explore new markets like Bhubaneshwar, Chandigarh, Coimbatore and Ahmedabad while consolidating its presence in Hyderabad and Chennai.

More and more companies are opting for co-working spaces as they offer 20-25 percent cost savings as compared to working in conventional office spaces. The trend of co-working spaces is more than a flash in the pan and has already begun to disrupt traditional office setups. As this concept gains popularity, the total space leased by co-working operators in the major cities could expand to 7–9 million sq. ft. by 2020.

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