Smartworks leases 2.5 lakh sq ft in Hyderabad’s Aurobindo Galaxy – ET RealEstate

NEW DELHI: Smartworks, a homegrown co-working startup, has leased 2,50,000 square feet in Hyderabad’s Aurobindo Galaxy, taking its total operational space in the city to 4 lakh square feet, a senior executive of the company said on Tuesday.

This, at a time demand for flexible office spaces has risen after pandemic-induced lockdowns. Companies are weighing a hybrid working model—work from home and office—amid the need to maintain social distancing to reduce the risk of contracting the novel coronavirus.

In fact, Smartworks is on an expansion spree—planning new facilities in Noida, Uttar Pradesh, and more coworking spaces in Hyderabad, Bengaluru and Pune.

“We have actually doubled our footprint in Hyderabad. Hyderabad is an important part of our strategy. After Bangalore, it is the largest in terms of size and potential. Our first facility, Purva Summit, is 80-85% occupied by enterprises and high-growth startups,” said Neetish Sarda, founder at Smartworks.

According to Sarda, 30-35% of the new facility has been booked by enterprises.

Centrally located in the city’s business hubs, Aurobindo Galaxy scores on the connectivity front as well, with quick access to Hyderabad airport, metro stations, commercial establishments and residential areas. It is the tallest commercial office tower in India built with precast technology.

“We are witnessing high demand and enquiries from enterprises, our new facility is 35-40% booked already. With the workforce returning to work, they (companies) want to solidify their workspace strategy going forward. We remain optimistic about the flex space growth and momentum,” Sarda said.

Average seat cost in a traditional office space is around Rs 14,000-15,000 while Smartworks offers a seat at around Rs 10,000-12,000. The new facility will offer close to 4,000 seats.

Smartworks acquires an entire building and converts it into a coworking campus, unlike other coworking operators that usually acquire a floor or portions. According to JLL, the current market penetration of flex spaces in total office space stands at 3.0%.

In 2021, India is expected to witness deeper penetration of flex spaces as corporate occupiers continue to shift away from long-term capital-intensive commitments. Flexible space solutions will be leveraged to satisfy temporary space needs, support a more mobile workforce and enter new geographies.

“In fact, driven by increased demand from large enterprises, we expect the size of the flex space market to reach nearly 39 million square feet in 2021,” JLL said.



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SoftBank reaches settlement with former WeWork CEO Adam Neumann – ET RealEstate

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BENGALURU: SoftBank Group Corp said on Friday it has reached a settlement with WeWork‘s special committee and the company’s co-founder and former chief executive, Adam Neumann, putting to rest a legal battle dating back to 2019.

SoftBank, the new owner of the office-sharing firm, did not disclose terms of the settlement. Media reports earlier this week indicated the deal includes a nearly $500 million cut in Neumann’s payout from SoftBank.

The legal tussle between SoftBank and Neumann started in 2019, when SoftBank agreed to buy around $3 billion in WeWork stock belonging to Neumann as well as current and former WeWork employees. SoftBank later contested its obligation to purchase the shares.

Under the new settlement, SoftBank will purchase around half the shares it had originally agreed to buy, a source familiar with the talks had told Reuters on Monday.

The settlement is also expected to clear the decks for WeWork as it reportedly pursues a public listing by merging with a special purpose acquisition company (SPAC).

“This agreement is the result of all parties coming to the table for the sake of doing what is best for the future of WeWork,” said Marcelo Claure, executive chairman of WeWork and CEO of SoftBank Group International.

SoftBank, which poured more than $13.5 billion into WeWork, was pulled into the legal dispute with directors at WeWork after backing out of the $3 billion tender offer agreed when it bailed out the office-sharing firm following a flopped IPO attempt.



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Co-working spaces see 80% demand recovery – ET RealEstate

BENGALURU: Co-working companies are seeing a revival in interest after a pandemic-hit year as some companies — mostly small and medium enterprises — slowly bring some employees back to office.

Occupancies in the first two months this year have been about 80% of the year-ago period, while average occupancy is about 50%. Companies say that while many large players have signed up for these spaces after giving up long-term leases at office parks, many have decided not to bring in their employees before June.

“On a month-on-month basis, we have been adding 4-5% in occupancies since September and currently we are at 67% compared to about 90% last year. During the peak of the pandemic, we were down to about 50% and we expect it to go up to 75% by April,” said Amit Ramani, founder and CEO of Awfis.

Buoyed by the demand from corporates, many of whom are not keen to enter traditional long-term leases of 3-5 years, co-working companies are also looking to increase the number of seats. For example, Awfis is looking to add 24,000 seats by the end of December.

Karan Virwani, CEO of WeWork India, says that in this volatile business environment, companies are looking at greater flexibility, which is a key driver on how they choose their workplace for the future. “This is not just commitment in terms of tenure but also access to offices and ability to get workspace on demand.”

WeWork started a new product to attract more enterprises — companies can pay up to Rs 10,000 per month to get an access card that can be distributed among employees who can use it to enter any WeWork office across the country and work seven days a week. Current occupancies are up to 38% from just 5% last year.

Virwani added that demand in the current quarter has been similar to the one last year and expects to end at higher numbers. “Demand has increased from large occupiers as well like Commonwealth Bank, OnePlus. Many companies, whose leases ended during lockdown, chose not to renew but come to us. Even Ola used us for interim office space,” he added.

Gurugram-based 91Springboard says it has seen small and medium companies, with less than 50 employees, making a faster return every week. While occupancies in January were 70-75% of pre-Covid levels, this month it is 85-90%.

“We have clients who started with just six people in October before ramping it up to 100 this month,” said 91 Springboard co-founder Anand Vemuri adding that while larger companies have signed agreements, they do not plan a return before mid-year.

“Companies do not want to make long-term commitments for 3-5 years but for about two years. They also do not want to pay for fit outs upfront but looking for integrated solutions,” explained Vemuri.

Harsh Lambah, country manager India at IWG said his company is seeing larger work space requirements from bigger companies who want to realign their real estate portfolio. “Large enquiries are across multiple centres across cities and we are aggressively looking to open new centres.”



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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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