With most organisations asking employees to work from home, one business that’s going to be seriously affected is that of the co-working space. When more and more people start working remotely, these spaces are likely to be rendered vacant.
As per a report by real-estate consultancy firm, CBRE, in Q1 2019, the co-working segment witnessed a 277 per cent upsurge in leasing to nearly three million square feet. The sector grew by 70 per cent quarter on quarter, with 10 per cent of office spaces being occupied by co-working. The 10 per cent occupancy was expected to rise to around 25 per cent in the next few years.
However, with the recent unfolding of events, this figure seems to be too ambitious, and the very sustenance of the segment is under question.
As of now, the business is not that affected because most bookings are done in advance, but if the Covid-19 scare prolongs for a few months, it could take a u-turn.
“Majority of our clients are long term and as of now, this seems to be a short-term concern,” says Ashish Goenka, director, Redbrick Offices.
However, the immunity that it is enjoying today will not stay longer as new incoming clients may look to defer or delay their start dates.
Dr Ritesh Malik
“We have cancelled all the events which were booked for upcoming months, to avoid large gatherings as per the government directive”
In a co-working office, most clients book seats for a period of three to six months or a year. However, the challenge is that payments are made on a monthly basis. If they do not occupy the space and refrain from using it for a longer period of time, payments will also be hit subsequently.
Companies operating co-working spaces are really optimistic that the dip in occupancy is temporary and all will be well.
Vinayak Agrawal, co-founder and CTO, myHQ, agrees that the growing concerns around COVID-19 have led to reduced footfall at all their workspaces. However, they do not foresee any immediate impact on revenues, as their clients have already committed for a full month.
Vinayak Agrawal
“There are several disadvantages, such as lack of social interaction and difficulty in interpersonal or group communications, while working from home. so we hope to get back to business soon”
Nonetheless, Agrawal also accepts that in case there is a mandatory lockdown, they may see a slight impact on short-term revenues. At the same time, he is also positive that as soon as the situation improves, there will be a quick turnaround as most people find working from home a temporary solution.
“There are several disadvantages, such as lack of social interaction and difficulty in interpersonal or group communications, while working from home,” he opines.
Agrawal seems quite optimistic when he says that the current situation may force large enterprises to relook at their workplace policies. They will have distributed teams working from remote locations. If this happens, it will mean an uptick in demand for co-working or on-demand workspaces in the long run.
Like regular offices, co-working spaces are also giving high impetus to hygiene and sanitisation. Redbrick Office, for instance, has allotted isolation centres and medical professionals on site or on call. “We are doing everything we can so that if people need to come in to work, they are comfortable,” shares Goenka.
Ashish Goenka
“Majority of our clients are long term and as of now, this seems to be a short-term concern”
Dr Ritesh Malik, founder, Innov8 Co-working Space, says, “For us, our customers’ health has always been our prime concern. I am a doctor first and a businessman thereafter, and hence, I go by the saying ‘health is wealth’. While until now we haven’t had any positive case of COVID-19 in any of our premises, we are leaving no stone unturned to promote utmost hygiene practices.”
Innov8 has deployed a larger army of cleaners and has also decreased the time gap between cleaning activities. If earlier it was every four hours, then today it is almost every one to two hours.
“We have taken a few steps to make the place safer for the occupants. For instance, we have asked everyone to not cluster in groups of more than five while having lunch. At the same time, we have cancelled all the upcoming events, in order to avoid large gatherings as per the Government’s announcement,” adds Malik.
In fact, cancelling events will also affect the revenue flow to a large extent, but Malik hopes it will only be temporary.
Amidst this pandemic, these owners are ready to bear the brunt of monetary loss but not at the cost of their customers’ health. They feel that this turmoil will last for a very short time, and once this global issue comes to an end they will revise their business models to take care of the present loss of cash flow.
All she wanted to do since her school days was pursue journalism. She takes keen interest in digging into the unpublished aspects of people's life and profession. Her writing experience has been quite diverse – entrepreneurship, lifestyle, logistics, health, management and now she enjoys writing on HR! She is a foodie by nature and pet lover at heart.
