315Work Avenue leases around one lakh sq ft workspace in Bengaluru – ET RealEstate

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BENGALURU: Coworking space provider 315Work Avenue has taken a total of around one lakh sq ft of office space on lease here to set up two new centres as it sees strong traction from large enterprises post the lockdown. These 2 Grade-A office space centres located at Koramangalaand Old Madras roadwill have around 2000 seats, it said in a statement.

The expansion comes at a time when companies see merit in setting up satellite offices across multiple locations to help people work nearer home and to enable a distributed workspace model, it said.

The company currently manages 15 workspaces with around 12,000 seats across multiple prime locations here.

315Work Avenue plans to beef up its total portfolio to 25,000 seats this year with a focus on south and west India, while further strengthening its presence here.

Founder, 315Work Avenue, Manas Mehrotra said in the current situation, taking a conventional office space is becoming challenging for companies, and most of them are looking for flexible office spaces, and thus safeguarding them from capex cost, longer lock-in terms and huge deposits.

“Corporates and large enterprises too will avoid high capital expenditures and look towards flexible working spaces to expand business. Moreover, the pandemic has highlighted the importance of de-densification of office space and adoption of hub and spoke model,” he said.

According to a Savills India report, leasing activity by coworking operators is expected to increase by 42 per cent in 2021 over 2020, and the share of coworking space take-up in overall office leasing activity is poised to rebound to a 15 per cent share in 2021, similar to the 2019 level, the statement said.

Bengaluru and Hyderabad continue to see maximum traction of the total leasing activity in the coworking segment, it was stated.

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Flexible space market to cross 50 million sq ft by 2023: Report – ET RealEstate

NEW DELHI: Irrespective of several short-term disruptions and challenges, increased demand from large enterprises, will support the growth of the flex space market to more than 50 million sq ft by 2023, according to a recent report by JLL India.

The current market penetration of flex spaces into India’s total office stock stands at 3% which is expected to move to 4.2% by 2023.

It is anticipated that flexible space will grow by an average of around 15-20% per annum over the next three-to-four years, although this trajectory will not be linear, said the report.

According to the report, Bengaluru and Delhi-NCR together account for more than 50% of India’s flex stock followed by Hyderabad with 4.5 million sq ft and Mumbai with 4.3 million sq ft of flex office stock. Hyderabad and Pune are among the fastest-growing flex markets.

However, the availability of capital, in the current scenario, will be a challenge. Players who have embarked on aggressive growth so far will find themselves strapped for capital. In such a scenario, the market is likely to witness consolidation activity driven by larger operators with financial wherewithal acquiring smaller ones.

“While the flex-space market more than tripled in the last three years, the momentum going ahead will be relatively slower. Players are likely to tread cautiously, and the overall market is expected to expand 1.5 times from the current size,” said Dr Samantak Das, chief economist and head of research & REIS, JLL India.

Going forward, large enterprises might look at splitting up their offices to reduce commute times and dependence on public transport. However, with expected economic uncertainty, companies will be hesitant to commit large capital to real estate, said the report.

The densification trend that had emerged over the last decade will likely reverse with enterprises leaning on flexible office space to relax space density.

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IWG’s revenue fell 10.2% to $754.38 million in Q2 FY21 – ET RealEstate

BENGALURU: British office space provider IWG said on Tuesday it has started to see some improvement in its sales activity and highlighted increasing interest in flexible working as companies address how their employees will work in the future.

The owner of the Regus brand said the advent of further potential pandemics and the need to preserve liquidity by limiting capital and operating expense signals a clear shift towards flexible working.

Shares in the company were up 2.6% at 261.4 pence in early trade.

IWG, which competes against U.S.-based WeWork, said it has seen a strong pick-up in demand for its suburban locations, along with a rise in the sale of small offices, accommodating one to two people, compared to pre-COVID-19 levels.

The company said revenue fell 10.2% to 583.3 million pounds ($754.38 million) in the quarter ended Sept. 30, hurt by customer churn and the significant impact the pandemic had on service revenue.

The year “2020 has presented the toughest challenge the Group has experienced since its formation 31 years ago,” the company said, adding that it was on track to achieve targeted annualised cost savings of about 200 million pounds.

IWG, which is also looking to grow inorganically, said it is close to deploying the first tranche of capital raised in May with deals in the final stages of due diligence.

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WeWork sells control of China unit to Trustbridge Partners – ET RealEstate

BENGALURU | SHANGHAI: U.S. office-sharing firm WeWork on Thursday said it will sell control of its China division to one of its investors – private equity firm Trustbridge Partners – as it steps back from a competitive market where it has suffered low-occupancy rates.

The deal effectively offloads the China unit away from the parent, which has faced fundraising issues since a failed attempt to go public in 2019.

WeWork said it will maintain a minority stake and “participating interest.” Concurrent with the deal, the division has received $200 million in funding from existing investors.

Michael Jiang of Trustbridge Partners will serve as WeWork China‘s acting chief executive officer.

Trustbridge and Singapore state investor Temasek Holdings (Private) Ltd held talks with WeWork’s Chinese unit over increasing their stakes and taking majority ownership, Reuters reported in January.

WeWork shelved its initial public offering in 2019 after investors grew wary of its losses, business model and corporate governance, leading to the resignation of co-founder and former chief executive officer Adam Neumann.

It has since undergone significant management change yet remains enmeshed in lawsuits over a $3 billion tender offer to existing shareholders.

Last month, the New York-based startup said it had almost halved its cash-burn rate from the end of last year and obtained a $1.1 billion commitment in new financing from Japan’s SoftBank Group Corp.

SoftBank, meanwhile, has been steadily offloading assets to raise money after a spending spree late last decade. This month, it said it would sell chip designer Arm Ltd, purchased in 2016, to semiconductor giant Nvidia Corp for $40 billion.

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