Kolkata: Co-working spaces gain momentum in Sector V – ET RealEstate

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KOLKATA: Small- to medium-sized warehouses and co-working spaces are suddenly the rage in the Sector V IT hub of Salt Lake owing to the pandemic, which has made WFH the new normal and forced IT firms and private companies to do away with expensive — and expansive — office spaces.

While smaller startups have been among the first to let go of large office spaces, several bigger companies with multiple commercial spaces are also recalibrating their options.

“Global economic challenges and an increase in WFH culture is leading to a muted demand for office spaces in the city,” said Kalyan Kar, the secretary of Sector V stakeholders’ association and the MD of Inthink Knowledge Ventures. “Sector V is one of the most heavily affected places because of this trend and a large number of companies — mostly startups and even some companies with multiple office spaces in the township — are revising their options. While some are letting go of the spaces completely, others are going for a space-sharing model,” he added.

Arindam Ray, director of AQB Solutions in Sector V, who had shifted to an 8,000sq ft office at the start of the year, is also planning to shift to a smaller space. “As of now, we don’t need such a large space. We had set up this place at a huge cost but, only 2-3 of the 80-odd employees are coming to office. We have reached an agreement with the owner to pay a much reduced rent, but we are also thinking of shifting to a smaller space in a month or two,” Ray said.

The AQB Solutions director said he was in talks with the landlord to share the current space with some other company, which would halve their cost.

While city-based officials in major corporates and IT firms told TOI they were in no hurry to return to pre-Covid office norms, and many even planned to let go of large spaces, emailed queries to spokespersons of major players like Cognizant, TCS and PWC did not generate in any replies.

Ravindra Chamaria, the chairman-cum-managing director of Infinity Group, which owns major Sector V commercial spaces like Infinity Thinktank, Infinity Benchmark and Godrej Waterside, confirmed the trend, saying companies were trying their best to reduce cost. “It is true that people are trying to cut down costs. But there are also some companies who are coming over to Sector V, shifting their offices from the city’s central business district, in a bid to cut down on expenses. At offices where most employees are working from home, they cannot afford to shut down the office completely, as there is always the need for servers and tech support. Overall I believe this is a temporary phase; but, in the long run, people will need more office space in the new normal future,” said Chamaria.

The current situation has also boosted a demand for co-working spaces. Neetish Sarda, the founder of Smart Works, a leading co-working centre in the country, said there had been a sudden spike in the number of queries and finalisation of deals in their co-working spaces in Kolkata over the last few months. “Although we have a big set-up in Kolkata, business was a bit slow. But since the pandemic, there has been a steady spike in the number of queries and closure of deals. We are also in the final stages of deal completion with some big multinationals, who are willing to let go of their large office spaces and shift to our co-working spaces spread across the city,” Sarda told TOI.

Industry experts said even though corporates may think it’s more viable for employees to WFH during the pandemic and using smaller office spaces, it is not a permanent solution. “A large chunk of work needs constant monitoring, which is only possible in an office environment. When people start coming back to office, they would need even larger spaces to suit the new normal norms. We believe this is a passing phase,” said Chamaria.

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Coronavirus-fueled uncertainty could accelerate consolidation of flexible office spaces – ET RealEstate

BENGALURU: The flexible office space is expected to undergo a major consolidation phase with uncertainty looming large on the segment due to the Covid-19 pandemic and a resultant demand slump.

While a large operator like RMZ is exiting the business, global major WeWork plans to expand as per client specifications only for some time. Awfis and Smartworks have also slowed down the pace of expansion as they continue to study the evolving market dynamics.

“We will grow as per our client requirement and focus on opportunistic expansion rather than speculative,” said Karan Virwani, CEO at WeWork.

Though consolidation within co-working space started in 2018 with major acquisitions like One Co.Work acquiring IShareSpace and AltF CoWorking acquiring Noida-based Daftar India, Covid-19 will accelerate the process as weak players will be weeded out, say experts.

The period of low occupancy with increased operational costs is making multiple small players unviable. “There will be huge consolidation in the co-working space as managing cash flows will become difficult. We are onboarding clients and offering rental waiver till they occupy the facility,” said Neetish Sarda, cofounder of Smartworks.

The pandemic has hurt small co-working space operators with around 3.2 million sq ft of flexible office space expected to be vacated this year, according to a study by Knight Frank India. “We expect larger players with a greater weightage of enterprise tenants to endure, while those with tenant profiles predominated by MSMEs and startups are expected to shut businesses,” said Shishir Baijal, chairman, Knight Frank India.

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Karnataka offers sops for co-working spaces and IT companies – ET RealEstate

BENGALURU: In its endeavour to develop a robust IT ecosystem beyond Bengaluru, the Karnataka government has doled out a slew of sops for IT companies, encouraging them to set up shops outside the city, a minister said on Thursday.

“We aim to also strengthen the ecosystem and boost growth in Tier 2 and Tier 3 cities of the state. We project that over 60 lakh plus new jobs will be created in this sector,” said IT, BT, Science and Technology Minister C.N. Ashwath Narayan.

As part of the sops, the government will offer financial support to IT hubs and clusters of up to Rs 3 crore outside Zone 3.

Similarly, co-working and plug and play infrastructure players will be eligible for a financial support of Rs 2 crore outside Zone 3.

The minister also announced stamp duty exemption — 75 per cent in Mysuru, Hubballi, Dharwad and Mangaluru, and 100 per cent for all other zones except Zone 3,” he said.

Likewise, the government will also offer quality certification cost reimbursement of up to Rs 6 lakh outside Zone 3, including marketing cost reimbursement of Rs 5 lakh.

Companies outside the zone will also be eligible for provident fund and ESI reimbursement of up to Rs 10 lakh.

As part of the other major initiatives, the government will consider incentives for mega projects above Rs 250 crore on a case by case basis.

Concessional power tariff and continued exemption from the Karnataka Industrial Employment rules and others have been offered to the eligible entities.

The state offered these attractions as part of its new IT policy for the period 2020- 25.

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Smartworks leases four lakh sq ft in Bengaluru and Mumbai – ET RealEstate

BENGALURU: Smartworks Coworking Spaces has taken more than 400,000 square feet of office space in Bengaluru and Mumbai on a long-term lease spread over 15 years in a bid to use the Covid-19 crisis as an opportunity to grow in a less competitive market.

With this deal, financial details of which were not disclosed, the Noida-based co-working spaces operator’s footprint has expanded to more than 4 million sq ft, with a total investment of Rs 250 crore so far.

“We are very bullish on scaling our business in the existing cities. We have leased over 1 lakh sft in Bengaluru alone in the last two months to clients across IT-ITes/BFSI and manufacturing,” said founder Neetish Sarda.

Smartworks has been growing in southern and western India since early 2019 and is expected to expand its workplace portfolio to 4.5 million sq ft by 2020-end.

“Smartworks has clocked over Rs 100 crore in revenue and has been profitable for an entire year at the corporate level,” said Sarda.

Currently, the company has 70, 000 seats spread across 31 centres in nine cities, including the National Capital Region (NCR), Mumbai, Bengaluru, Hyderabad, Pune, Chennai and Kolkata. “We are growing as per our clients’ requirements and are seeing demand from large companies,” said Sarda.

In October last year, Singapore-based Keppel Land had invested US $25 million in Smartworks Coworking Spaces for a minority stake. The company plans to enter cities such as Bhubaneswar and Ahmedabad with small-format facilities in coming years.

It has a presence in nine major Indian cities – Delhi, Noida, Gurgaon, Kolkata, Bengaluru, Mumbai, Hyderabad, Chennai and Pune. Many large companies and e-commerce firms are likely to adopt a mix of core workplaces and external flexible options post COVID-19.

Co-working has been among the fastest-growing segments for the past three years. However, the segment saw a huge contraction in business due to the global outbreak of COVID-19.

According to the latest report by Knight Frank, smaller co-working space operators are expected to find it very difficult to weather the COVID-19 storm with around 3.2 msf of flexible space anticipated to be vacated by these operators in 2020.

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