India: Companies opt for co-working spaces to rein in surging costs

As covid-19 has forced companies and employees to shift to remote working and with a sharp fall in revenues, firms are preferring to take up flexible co-working spaces rather than renting large offices to cut costs.

“As occupiers strive to be agile in these unprecedented times, they prefer to adopt a capex-light model and look at pre-fitted spaces and managed offices offered by flex space operators,” said Naveen Nandwani, managing director, commercial advisory and transactions, Savills India.

Nandwani added that this would provide the flexibility of not committing to long-term contracts. “A hybrid model or a concept of ‘work from anywhere’ is also emerging where employees can either work from home or in office or even in flexible office spaces,” he said.

This could cause major issues for commercial real estate developers who have bet hundreds of crores of rupees in developing large office complexes.

According to a report by real estate data provider CRE Matrix released in May, around 391 million sq. ft of commercial space and 37,072 crore worth of leases are at stake in the next 12 months. Of this, around 17,603 crore (186 million sq. ft) of leases have either lapsed or are set to expire in 12 months.

If a company takes a typical lease for a 1,000 sq. ft, it is locked in for three to five years. So companies work out a three- to five-year hiring plan before buying or renting a space and getting locked in.

With real estate rentals forming a significant part of fixed costs for companies that do not own their office spaces, renting smaller spaces is preferred.

Technology and financial services firms occupy the bulk of top-grade commercial real estate assets in the country, though many are cutting down on their real estate flab in favour of remote working. They believe a hybrid of both home and office will best meet employee needs.

These companies not only have long-term leases but have also invested heavily in office spaces over the years with server, cloud and IT hardware infrastructure.

This article was first published on livemint.com.

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.